After peaking the day before, DI rates closed sharply lower on Thursday, with the market reacting well to the authorities’ speeches on fiscal balance and with some investors repositioning themselves in fixed income, while also the orientation coming from abroad was bearish after the release of data on the North American economy.
At the end of the afternoon, the DI (Interbank Deposit) rate for January 2025 – which reflects very short-term monetary policy – was at 10.65%, compared to 10.718% in the previous adjustment. The DI rate for January 2026 was 11.235%, compared to 11.323% in the previous adjustment, while the January 2027 rate was 11.59%, compared to 11.706%.
Among longer contracts, the rate for January 2029 was 12.025%, up from 11.126%, and the contract for January 2033 was 12.23%, up from 12.308%.
During a trip to Switzerland, President Luiz Inácio Lula da Silva defended Finance Minister Fernando Haddad after rumors in recent days that he was weakened in government.
According to Lula, Haddad made an effort to find an alternative compensation for the exemption of 17 sectors of the economy and small municipalities: the PIS/Cofins deputy, returned to the Executive by the President of the Senate, Rodrigo Pacheco (PSD-MG) ) .
“Now there is a decision from the Supreme Court. If in 45 days there is no agreement on compensation, what will happen? The exemption will end: it was what I wanted, that’s why I vetoed it at that moment,” Lula recalled . “So now the ball is no longer in Haddad’s court; the ball is in the court of the Senate and the businessmen.”
For his part, Haddad declared in Brazil that the Ministry will help the Senate analyze measures to offset the payroll tax cuts, specifying that the proposals will be discussed next week. “All the senators’ proposals will be examined by us to forward the impact analysis of each of them,” he said.
Haddad also said that the economic team has intensified work related to the public spending review with particular attention to the closing of Budget 2025.
Finally, Vice President and Minister of Development, Industry, Trade and Services Geraldo Alckmin said that the dollar’s recent rise is “momentary” and that the government is confident of a drop in prices. “We have absolute confidence that the dollar will fall, this is a temporary thing,” he said.
Alckmin also stressed that the government is committed to maintaining fiscal balance and controlling inflation.
“Today the authorities’ statements were going in the right direction”, commented the chief economist of the BMG bank, Flavio Serrano, justifying the drop in DI rates.
The speeches of Lula, Haddad and Alckmin took place between late morning and early afternoon.
Earlier in the day, DI rates swung higher as concerns persisted over the Lula government’s ability to rebalance the public finances. The increase came despite the fact that Treasury yields were falling overseas.
The move in North American bonds was justified by the 0.2% decline in the producer price index (PPI) in May, better than the 0.1% increase expected by the market, and the increase of 13,000 claims for benefits of unemployment last week, for a seasonally adjusted value of 242,000. , above the 225,000 expected by economists.
US data strengthened the prospect of two interest rate cuts by the Federal Reserve in 2024.
In Brazil, futures rates lost strength and went into negative territory between the end of the morning and the beginning of the afternoon. In addition to the drop in yields, the authorities’ statements brought some relief to businesses.
The maturity rate for January 2027 went from a maximum of 11.840% (+13 basis points compared to the previous adjustment), at 9.18 am, to the minimum value of 11.530% (-18 basis points) at 2 pm: 44, already after the declarations of Lula, Haddad and Alckmin.
As rates had risen significantly the day before and last Friday, some investors also took advantage of the session to take profits or reposition.
“Since Friday, our rate curve has been very tight due to political noise and concerns about fiscal balance,” commented Vitor Oliveira, fixed income specialist at One Investimentos. “After all the stress, today (Thursday) there is a cooling, with the curve returning a bit (from the recent high),” he added.
Despite the decline, the Brazilian curve continues to indicate that the end of the process of cutting the Selic base rate, currently at 10.50% per annum, will take place this month.
Nearing the close, the price curve indicated an 89% probability of maintaining the Selic rate at 10.50% at the meeting of the Monetary Policy Committee (Copom) of the Central Bank. There was another 11% chance that Collegiate could raise Selic by 25 basis points this month – a probability that appeared last Friday, in the noise of the session.
Abroad, Treasury yields continued to fall late in the afternoon.
At 4.39pm, the yield on 10-year Treasury bonds, the global benchmark for investment decisions, fell 5 basis points to 4.242%.
Source: Terra
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