(MENAFN– The Rio Times) Interest rate futures in Brazil have increased for the fourth consecutive day, approaching 13% for various terms.
The yield curve illustrates growing concerns about President Lula’s fiscal policies amid global economic uncertainties.
In October, rates increased in 10 out of 14 trading sessions, reflecting market worries about Brazil’s economic path.
By late afternoon, the DI rate for January 2025 rose to 11.192%, up from 11.182%. Longer-term rates also climbed significantly, with January 2027 reaching 12.92% (up from 12.849%) and January 2028 hitting 12.955% (up from 12.89%).
Rates for January 2030 and January 2033 increased to 12.97% and 12.86%, respectively. These rises occurred despite falling U.S. Treasury yields, emphasizing Brazil-specific concerns. Pessimism remains regarding public finances, which kept both interest rates and the dollar strong against the real.
Finance Minister Fernando Haddad stressed the importance of sustainable growth at an event in São Paulo. President Lula indicated potential special credit for those affected by recent blackouts. Rafael Sueishi from Manchester Investments highlighted that external factors, such as uncertainties in U.S. policy, also pressure Brazilian rates.
At one point, the January 2030 DI rate reached 12.99%, reflecting a high level of market pessimism. Sueishi mentioned that expectations of a Selic rate above 13% may be overstated but noted the influence of foreign investor impatience.
Near closing, there was a 90% chance of a 50 basis point Selic rate hike in November, with a 10% chance of a 75 basis point increase. The current Selic rate is 10.75%. Meanwhile, U.S. Treasury yields saw slight declines, contrasting with Brazil’s rising rates and highlighting local economic concerns.
`
