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BRAZIL: DI Swap Rates Outperform As Fiscal Concerns Ease

BRAZIL
EM BulletBulletGlobalEmerging Market NewsRegion
  • DI swap rates remain sharply lower on the day, as yesterday’s fiscal pessimism unwinds somewhat, aided by BCB Governor Campos Neto’s hawkish lean earlier and remarks that the market may have overreacted to the fiscal outlook. Yields in the belly and long end have fallen by around 20bp today, albeit they remain notably higher over the last week.
    • As noted earlier, Deputy Finance Minister Durigan has also said that Brazil will keep and comply with the 2024 fiscal target, while today’s Copom minutes made clear the message of cohesion among committee members regarding the gradual start of the tightening cycle.
    • Meanwhile, USDBRL remains 1.4% lower today, trading at fresh lows on the week earlier, around 5.45.
    • Tomorrow, focus turns to mid-month IPCA inflation data, which are expected to show a further slight decline of inflation in the first half of September.
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  • DI swap rates remain sharply lower on the day, as yesterday’s fiscal pessimism unwinds somewhat, aided by BCB Governor Campos Neto’s hawkish lean earlier and remarks that the market may have overreacted to the fiscal outlook. Yields in the belly and long end have fallen by around 20bp today, albeit they remain notably higher over the last week.
    • As noted earlier, Deputy Finance Minister Durigan has also said that Brazil will keep and comply with the 2024 fiscal target, while today’s Copom minutes made clear the message of cohesion among committee members regarding the gradual start of the tightening cycle.
    • Meanwhile, USDBRL remains 1.4% lower today, trading at fresh lows on the week earlier, around 5.45.
    • Tomorrow, focus turns to mid-month IPCA inflation data, which are expected to show a further slight decline of inflation in the first half of September.