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Brazilian Assets Extend Decline: Belly Of DI Curve Rises Over 60Bps

BRAZIL
  • Fears surrounding the possibility of a spending cap breached appear to be growing, evidenced by further significant moves lower in local asset prices.
  • DI swap rates are rising between 20-60bps across the curve, with the belly experiencing the greatest pressure. Comments from BCB Deputy Governor Kanczuk regarding a fiscal path deterioration and tighter monetary stance is amplifying the moves on Tuesday.
  • USDBRL has risen above 5.60 opening 5.6428, 76.4% of the Mar - Jun downleg, while the Ibovespa has fallen the most in 3 weeks, down over 3%.
  • To note, the cabinet of Brazilian Congressman Hugo Motta, the rapporteur of the court-ordered payments bill, said the voting session scheduled for today will now take place on Wednesday, at 2pm (local time).
  • Brazil Ibovespa down 3447.4 points (-3.01%) at 110980.8
  • USDBRL up 1.52% at 5.6002
  • BRLMXN down 2.32% at 3.62
  • Brazil DI Swaps:
    • Jan '22 +18 bps at 7.57%
    • Jan '23 +52 bps at 9.87%
    • Jan '26 +61 bps at 11.07%
    • Jan '31 +54 bps at 11.62%

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