DI rates closed at a stable low on Friday as Treasury yields fell overseas, following the release of favorable U.S. inflation data and adjusting to the decline in yields also seen on the day before, when it was a public holiday in Brazil.
At the end of the afternoon, the interbank deposit (DI) rate for January 2025 – which reflects very short-term monetary policy – was at 10.395%, compared to 10.429% in the previous adjustment, on Wednesday.
The DI rate for January 2026 was 10.8%, compared to 10.867% in the previous adjustment, while the rate for January 2027 was 11.155%, compared to 11.238%. The rate for January 2028 was 11.455%, up from 11.543%, and the contract for January 2031 was 11.85%, up from 11.94%.
DI rates had risen more than 20 basis points on Wednesday, with investors increasingly betting that in the current cycle the Central Bank will no longer cut the Selic base rate, currently at 10.50% per annum, and may even raise interest rates . in the future if inflation expectations remain unstable.
Since Thursday was Corpus Christi holiday in Brazil, the market had already opened on Friday by adjusting prices taking as reference the sharp increase in rates on Wednesday and the drop in Treasury yields the day before, after a downward revision of gross rate growth North American. Domestic Product (GDP) in the first quarter.
The bearish bias was strengthened by the publication of the PCE inflation index, a figure widely observed by the Federal Reserve when formulating monetary policy. The gauge rose 0.3% in April, the U.S. Commerce Department said, matching March data. On an annual basis, the indicator increased by 2.7%, the same percentage as in March. The results for both the month and the year are in line with the projections of economists consulted by Reuters.
Core PCE rose 0.2% in April, below the 0.3% expected by economists.
In reaction, Treasury yields fell on a reading that the PCE maintains the prospect of a US interest rate cut in 2024. In Brazil, DI rates recorded their lowest levels of the session. At 9:33 am, shortly after the index was released, the contract rate for January 2026 hit a low of 10.775%, down 9 basis points from the previous adjustment.
There was some recovery thereafter, but the negative bias of Treasuries kept DI rates in negative territory until the end of the session.
Despite the drop in rates today, for Paulo Gala, chief economist at Banco Master, the month was difficult for Brazilian assets in general, with “the long curve hitting 12%, partly due to the problems here in Brazil, fiscal fears, fears about the Central Bank’s next steps, also due to the worsening of the external scenario, with ten-year Treasuries returning above 4.50%”.
However, according to him, two good news emerged on Thursday and Friday: US GDP and PCE.
“All of this raises the possibility of an interest rate cut (in the US) in September, so the market is fully hung up on the Fed’s next move,” Gala added, in an analysis sent to clients in the morning.
Near Friday’s close, the forward curve price indicated an 81% chance of holding the Selic rate at 10.50% annually in June, versus a 19% chance of a 25 basis point cut. For the November BC meeting, the curve was forecasting a 16 basis point increase in the Selic, compared to a 28 basis point increase observed on Wednesday.
As of 4:36 p.m., the yield on the 10-year Treasury bond – a global benchmark for investment decisions – fell 5 basis points to 4.508%.
Source: Terra
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