BC meeting this Wednesday: interest rates at 13.75% and high premium on the long curve
The market sees maintenance as the most likely scenario, but attention turns to long maturities after Lula's (PT) re-election.
BY THE X-TRADER NEWS NEWSROOM · REPORTING FROM INFOMONEY · 2 MIN
This Wednesday (4), the BC Monetary Policy Committee defines basic interest rates, in the first meeting after the elections. According to InfoMoney, financial agents' expectations are that interest rates will remain at 13.75% per year, but investors' focus is not limited to short-term interest. The strongest impact, however, tends to be felt by bonds with longer maturities, which have a high premium since Lula's (PT) re-election.
Other indicators reinforce the commitment to maintenance. On Friday (30), B3's Copom options indicated a 72.5% chance of maintenance, against a 26% chance of a reduction of 0.25 percentage points, according to InfoMoney. A Money Times survey of 21 institutions shows the same picture: 16 project the Selic at 13.75%, while 5 expect a cut of 0.25 p.p. to 13.50%.
The five names betting on a cut are the XP group, Bradesco, ASA, Inter and BB Investimentos. Most projections maintain the base rate at the current level until the end of 2026, but the estimates for December do not coincide. In other words, the doubt goes beyond this week's movement and reaches what the Central Bank signals for the rest of the year.
That is why the meeting is seen as a test of credibility. With the long curve already loaded with a premium, any signal that differs from the majority's expectations tends to be read with a magnifying glass, and the Copom's communication gains weight almost equal to that of the decision itself.
Wednesday also features other events. According to Money Times, the initial count of the ballot boxes in the United States, which choose part of Congress, shows a Democratic victory in the House and Senate. The ADP employment report comes out on the same day, and the payroll is due on Friday (6). Your Money also includes Itaú's balance sheet on the day's agenda.
What changes for the investor
The most direct effect for investors is on the long curve. As the premium is already high, a decision in line with the expectation of maintenance tends to shift the focus to more distant maturities and the tone of the statement regarding the next steps. Those who follow the stock market, Nasdaq and the dollar should also look at US employment data and the preliminary reading of midterms, as both help shape the view on interest rates and exchange rates in both countries.
Automatically translated from Portuguese.
