Direct treasury: the minimum fixed rate drops to 11.87%;  IPCA + 2032 and 2040 . cabinet work suspended

Direct treasury: the minimum fixed rate drops to 11.87%; IPCA + 2032 and 2040 . cabinet work suspended

On a day with a strong domestic economic agenda, financial agents reflect the release of the National Consumer Price Index (IPCA), which fell 0.68% in July – the lowest rate since the start of the historic series in 1980.

Already in the past 12 months, the official inflation rate has increased by 10.07%. The median forecast indicated that the IPCA would end negative at 0.65% in July, in a monthly comparison. On an annual basis, expectations were 10.10% higher.

Read more:
• What is deflation and what is its impact on the economy?

Attention should also be paid to the release of the minutes of the Monetary Policy Committee (Copom) meeting, in reference to the meeting held last Wednesday (3), which raised the interest rate to 13.75% annually.

In the document, the colleague said that “the current monetary tightening cycle is very severe and timely.” The committee also reiterated that it would “evaluate the need for a minor residual adjustment at its next meeting”.

In assessing the XP macroeconomic team, the minutes suggested that the committee ended the Selic rally cycle and that the policy rate should remain at that level for a long time until inflation slows more noticeably.

Facing the possibility that BC may have ended its tightening cycle, the publicly traded stock market on Treasury Direct is up for another day with a drop in prices on Tuesday morning (9). It is the fifth consecutive session of decline.

After hitting 13.51% this year, the fixed-rate Treasury 2025 offered an interest rate of 11.89% per annum in today’s first update, down from the 12% per annum seen the day before (8). The last time it traded below the 12% threshold was on April 11 this year.

The paper that matured in 2029 also lost the level of 12% annually when business opened. At 9:30 am, the security provided a return of 11.95% per annum, down from the 12.13% annualized recorded yesterday.

Inflation-related papers were also affected by lower real rates. At the start of the session, Treasury IPCA+2055 offered a real return of 5.90% per annum, compared to 5.94% a year earlier.

At Tesouro Direto, the details caught attention earlier this Tuesday. The treasury negotiations IPCA+ 2032 and 2040, with semi-annual interest, have been suspended, effective today, due to the interest payment scheduled for August 15, 2022.

According to the direct treasury rule, investment in bonds bearing interest coupons is suspended four working days before the date of payment. Likewise, there are changes to redemptions, which are interrupted two business days before the voucher is paid.

Check prices and quotes for all public securities available for purchase from Treasury Direct on Tuesday morning (9):

Source: Direct Treasure

IPCA

Under the pressure of lower fuel prices, especially gasoline and ethanol, as well as electricity, official inflation measured by the IPCA in July ended negative, after registering a positive change of 0.67% in June. In the year the cumulative inflation rate was 4.77%.

Petrobras announced on July 20 a 20-cent reduction in the average price of fuel sold to distributors. In addition, we also had Complementary Law 194/22, enacted at the end of June, which reduced ICMS’s use of fuel, electricity and communications,” explained Director of Research, Pedro Kislanov. “This reduction not only affected the transportation group (-4.51). %), but also on the housing group (-1.05%), due to electricity (-5.78%). He added that it was these two groups, the only ones with a negative difference in the index, that lowered the score.

Gasoline prices fell 15.48% and ethanol prices fell 11.38%. Benzene, individually, contributed the largest negative effect among the 377 sub-components that make up the IPCA, at -1.04 percentage point (r). In addition, there was a decrease in vehicle gas prices by -5.67%.

The researcher also highlights that in addition to the reduction of the ICMS rate imposed on electricity services, another factor that influenced the decline of the housing group was the approval of the National Electric Energy Agency (ANEEL) for the extraordinary revisions of the ten tariff. Distributors scattered across the country, bringing tariffs down from July 13.

Cobum minutes

Another highlight of the economic agenda is the presentation of the minutes of the meeting. For the XP macroeconomic team, the document emphasized that the global environment remains adverse and volatile, with prospects for lowering global growth forecasts, along with more persistent inflationary dynamics.

In the domestic scenario, the central bank estimated that temporary income support policies should stimulate demand and that an extension of these initiatives could raise the country’s risk premiums and inflation expectations.

According to the minutes, the committee has chosen to indicate that it will assess the need for a residual adjustment in order to bring inflation closer to the target on the relevant horizon.

BC also informed that, given the continuation of the recent shocks, it will remain vigilant and assess whether it is just the prospect of maintaining the base rate long enough that it will ensure such a convergence.

In the XP team’s view, the monetary authority should seize the moment to pause the adjustment cycle and analyze the delayed effects of monetary policy. Although they believed a pause was necessary, house specialists said that Selic at this level would not be enough to bring inflation to the center of the target in 2023.

For them, the base rate at this level will cause some slowdown. But they said that only when the monetary policy horizon changes to 2024 will British Columbia be able to see space to begin easing the cycle.

CPI and Commodity

Meanwhile, on the outside arena, New York futures indexes are rising, as investors look for new clues to assess the pace of monetary tightening by the Federal Reserve (the Federal Reserve, the US central bank).

The Consumer Price Index (CPI) for July, which will be released tomorrow (10), is expected to provide some clarity on the stance that the monetary authority should adopt. In the median forecast of the Refinitiv consensus, the CPI should advance 0.2% in July, compared to June.

Meanwhile, oil prices fell on Tuesday, due to recent progress in negotiations to revive the 2015 nuclear deal with Iran, which will pave the way for boosting its oil exports in a narrow market.

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