Future interest rates rise with fears about the economic agenda of the new Lula government
DI rates increased on Tuesday, after the All Souls' Day holiday, with the market paying attention to the new government's economic agenda, according to InfoMoney.
BY THE X-TRADER NEWS NEWSROOM · REPORTING FROM INFOMONEY · 2 MIN
Brazilian future interest rates rose on Tuesday, November 3, the first trading session after the All Souls' holiday. According to InfoMoney, the movement reflected market fears about the economic agenda of the new Lula government, in information attributed to Reuters.
At 10:55 am, the DI due in January 2028 was at 14.56%, compared to an adjustment of 14.48% in the previous session. The contract expiring in January 2035 marked 15.52%, compared to 15.332% in the previous session.
According to the figures released, the increase was more intense at the long end of the curve. The 2028 maturity rose about 8 basis points, while the 2035 maturity advanced about 19 basis points. The rate of a DI reflects what the market expects for interest until the contract expires, and therefore the long end tends to capture doubts about the fiscal horizon more strongly.
For the liberal reader, the central point is credibility. When the market is suspicious of the conduct of accounts, it charges more premium to finance the country, and this cost tends to appear throughout the credit system. The available investigation does not detail which points on the agenda generated the concern, which limits the dimension that can be attributed to the problem.
It is worth monitoring in the next sessions whether the increase is sustained and whether the government responds to doubts with clear signals about public accounts.
What changes for the investor
Higher future interest rates increase the required rate of return on risky assets and reduce the present value of distant flows, which usually weighs on the stock market. For those who follow the Nasdaq and the dollar, the yield curve is one of the channels through which fiscal news reaches prices, but the final effect depends on other factors that the calculation does not cover. This article does not provide a purchase or sale recommendation or price projections. The reader must follow the evolution of rates and government signals regarding public accounts.
Automatically translated from Portuguese.
