Real, Local Swap Rates Fail To Benefit From Global Risk On Sentiment

{BZ} As expected, Brazilian assets have failed to benefit from broader risk-on dynamics and is the notable poor performer in the region and EM.

• The currency continues to weaken, and the local swaps curve has continued it's bear steepening move, catalysed by the presumption of more populist measure heading into 2022 and potentially beyond.*The moves come in direct contradiction to other countries within the region, where local currencies are strengthening, and curves are bull flattening.
• Ibovespa is positive, however, showing relative fatigue compared to buoyant major indices.
• USDBRL up 0.7% at 5.8545
• Ibovespa up 206.6 points (0.19%) at 110805

Brazil DI Swaps:

• 1-yr +9 bps at 4.04%
• 2-yr +15 bps at 5.86%
• 5-yr +25.5 bps at 7.84%
• 10-yr +32 bps at 8.77%