Direct Treasury: interest on fixed-rate public bonds enters the second session of the increase and reaches 12.02%

Private CDBs pay inflation up to 8.63%, while floating rate ceilings are up to 110% of CDI; See returns highlights

Back-to-back downward revisions to expectations for this year’s broad national consumer price index (IPCA), along with expectations that the central bank will maintain the level set at 13.75% annually in September, have helped reduce the maximum return offered by some CDBs. ) in the last days.

Survey conducted by Quantum Finance, a financial market solutions company, on request InfoMoney, It showed that the maximum real return offered by the CDBs linked to inflation was the IPCA plus 8.63% per annum between the 16th and the 26th of this month. The paper in question had a maturity of 12 months and was issued by BTG Pactual.

For comparison, in the last two weeks’ survey, between August 1 and 12, the maximum return found among 12-month CDBs was IPCA plus 9.11% per year. Both returns do not deduct income tax (IR).

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CDBs maturing in either 24 months or 36 months have also seen a drop in maximum returns in recent days. The real interest increased successively from 7.14% per annum to 6.60% per annum and from 6.29% to 5.67% per annum.

There was also a decrease in average interest on IPCA-linked CDBs, with a focus on securities maturing within 24 months. According to Quantum, the yield has moved from the IPCA plus 6.78% annually on average in the last survey, to the IPCA plus 6.35% in the current survey.

Part of the decline is the effect of downward revisions on official inflation forecasts. This week, the Focus report – which compiles estimates from a group of economists consulted by the central bank – indicated that this year’s IPCA forecast is now at 6.70% annually, down from 6.82% recorded seven days earlier. Likewise, next year’s official inflation estimate is at 5.30%, down slightly from last week’s 5.33%.

This decline was also driven by the opinion of financial agents that the silk interest rate will expire this year at 13.75%, as reported in this week’s focus report. That bet has remained nearly the majority, following the minutes of the central bank’s recent Monetary Policy Committee (Copom) meeting, and downward revisions in inflation forecasts for this year and next.

Total returns from inflation-related CDBs (from 08/16 to 08/26)

Duration (in months) indexed lowest price average maximum rate number of titles top rate source
12 100% IPCA 6.15% 8.09% 8.63% 168 Banco BTG PACTUAL
24 100% IPCA 6.08% 6.35% 6.60% 10 Banco BTG PACTUAL
36+ 100% IPCA 5.20% 5.55% 5.67% 4 Banco BTG PACTUAL

Source: Quantum Finance. Note: Returns are total, excluding income tax deduction.

CDBs are related to CDI

Among securities with CDI-linked wages, the movement has been mixed: the average return on outstanding debt at three months has decreased, while the average yield offered by six-month notes has mostly increased.

In the first case, the average interest decreased from 102.28% of CDI to 102.01% of CDI. In other words, like a 12-month maturity, for example, the average return increased from 100.66% of a CDI to 101.40% of a CDI.

Excluding CDBs maturing at three months and 24 months—which saw yield fall from 105% of CDI to 104.50% of CDI and from 118% of CDI to 106% of CDI, in that order—most correlated with a record CDI rise at maximum rates, with focus On the 12-month bond, which has seen the yield rise from 108% of CDI to 110% of CDI in recent days.

The newspaper with the highest wages for one year was issued by Banco BMG.

Total Returns from CDBs Indexed to CDI (from 08/16 to 08/26)

Duration (in months) indexed lowest price average maximum rate number of titles top rate source
3 DI 97.50% 102.01% 104.50% 45 Banco BTG PACTUAL
6 DI 97.50% 100.78% 104.00% 39 XP . Bank
12 DI 90.00% 101.40% 110.00% 45 BMG Bank
24 DI 98.00% 100.17% 106.00% 76 Banco Mercantile Brazil
36+ DI 96.00% 102.73% 110.00% 31 Banco Mercantile Brazil

Source: Quantum Finance. Note: Returns are total, excluding income tax deduction.

CBD prefixed

In the case of fixed rate securities, where the yield is “locked in” at the time of purchase, the interest offered has not shown a single trend in recent days.

For example, CDBs maturing within three months reported a slight increase in maximum interest rates, which rose from 14.12% per annum to 14.15% per annum. This return was provided by a Banco Daycoval Bond.

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In the same way, bonds maturing in 12 and 36 months have seen their yield rise from 14.27% annually, in the latest survey, to 15.50% annually now, and from 14.15% annually to 14.20%, respectively.

On the other hand, papers with a maturity of six and 24 months reported lower returns, rising from 14.15% annually to 14.08% annually, and from 14.34% annually to 14.19% annually, in that order.

Returns from preset CDBs (16/8 to 26/8)

Duration (in months) indexed lowest price average maximum rate number of titles top rate source
3 prior 12.65% 13.79% 14.15% 66 Daikoval Bank
6 prior 13.38% 13.76% 14.08% 29 Daikoval Bank
12 prior 13.15% 13.90% 15.50% 35 Daikoval Bank
24 prior 12.35% 12.90% 14.19% 19 BMG Bank
36+ prior 12.01% 13.01% 14.20% 15th Daikoval Bank

Source: Quantum Finance. Note: Returns are total, excluding income tax deduction.

One eye on GDP, the other on Payroll

After a speech that is seen as more rigorous and tends to narrow monetary (extremist) by Jerome Powell, Chairman of the Federal Reserve (Federal Reserve, US central bank), on Friday (26), the highlight of the outside scene was the presentation of employment figures (Payroll) from the United States of America.

So says Luciano Costa, chief economist and partner at Monte Bravo Investimentos Payroll It is very important because it will be the last before the next meeting of the Federal Reserve in September.

For the economist, if the document brings a fresh surprise with strong job creation and a low unemployment rate, it should lead to discussions about a 0.75 percentage point increase next month, as well as US interest rate expectations.

At around 1:00 PM ET, 74.5% of agents believed the Fed should raise rates by 0.75 points at the September meeting, versus 25.5% of bets on a smaller 0.50 adjustment. A month ago, the situation was the opposite: a rise of 0.50 was seen likely with 72% of the market, according to CME Group.

Costa notes that the Fed is trying to “correct” the pricing introduced by the market that led to a significant rally in US stocks in July. At that time, the monetary authority suggested that the enterprise adopt more doves (less inclined to monetary tightening) in the upcoming meeting, consolidating gains in US stock indices.

The market even considered that it was possible that the Fed could cut interest rates as early as next year – a view that is losing ground among financial agents.

“We can’t imagine a scenario in which the Fed raises rates now and starts cutting them in the third or fourth quarter of 2023,” he says. Costa notes: “The biggest novelty in the discourse was the commitment to take the attention to a restrictive level and keep it for a while.”

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The US monetary authority’s tougher stance on controlling inflation should also be reflected in the domestic yield curve, explained Gustavo Song, chief economist at Suno. The explanation is that raising US interest rates will make US bonds more attractive.

As a result, there could be an influx of foreign capital from Brazil to the United States. The outflow of capital will devalue our exchange rate and put pressure on the curve [para cima]’, one summarizes.

Although the international scenario should be closely watched by the market in the coming days, the week will also hold several numbers of domestic activity, focusing on Brazil’s second quarter GDP, which will be presented on Thursday (1).

Costa, of Monte Bravo, says market estimates are closer to 0.70%, or 0.80%, from the previous quarter.

Suno’s Sung remembers that activity numbers can affect the yield curve, depending on the level of expansion verified between April and June of this year.

“If the numbers come in much lower than expected, which could indicate a slowdown, the curve could be negatively affected, as the market could see a faster rate cut in the future,” the Suno specialist warns.

On the other hand, says Sung, if activity is significantly above expectations and continues into the third quarter, that could indicate that inflation will be more steady. With this said, the market may see the need for a higher interest rate, for a longer period, which may also affect the curve, he thinks.

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