After a session of intense losses on the American stock exchanges and a sharp rise in future interest rates in Brazil, Friday (6th) promises to be another day of volatility, in the face of greater risk aversion, with the process of rising interest rates in the United States. States, war in Ukraine and blockades in China.
Financial agents monitor the release of the employment report (payroll) Of april. Investors are also keeping an eye out for Russia’s advance into eastern and southern Ukraine as its forces appear to have stepped up attacks in the regions.
On the local scene, attention is focused on the General Price Index – Internal Availability (IGP-DI), which rose 0.41% in April, well below market expectations.
Statements by President Jair Bolsonaro (PL) about Petrobras’ pricing policy also draw attention. In live the day before, the country’s representative said that the profits recorded by the oil company are “rape”.
News that the government wants to exempt foreign investments in corporate fixed income from Income Tax are also on the market’s radar. The report is from the newspaper Economic value.
In the Treasury Direct, the public bond market operates with high, in most rates, on the morning of this Friday (6).
After registering advances of more than 15 basis points (0.15 percentage points) the day before, the interest rates of a good part of the fixed rate papers are negotiated in stability or in a slight advance. Highlight for the Fixed-rate Treasury 2033, which offered 12.56%, at 9:20 am today, slightly above the 12.55% seen yesterday (5).
As a result, the return delivered by the paper maturing in 2033 reached a new high. This security started trading on February 21, 2022.
The rates offered by the other fixed-rate securities were also negotiated close to their maximum value.
Among the inflation-linked securities, the highlight was the Treasury IPCA+ 2055, with a half-yearly coupon, which paid a real interest rate of 5.81%, a percentage higher than the 5.77% in the previous session.
Check the prices and rates of all public securities available for purchase at the Treasury Direct that were offered this Friday morning (6):
IGP-DI and inflation above 10%
One of the highlights of the economic scene is the IGP-DI data. According to Fundação Getulio Vargas (FGV), the index changed 0.41% in April compared to March, which represents a deceleration in relation to the 2.37% advance seen in the previous month.
According to André Braz, coordinator of house price indices, the decline is the result of the contraction in diesel and gasoline prices, in addition to the drop in prices for soybeans, corn and iron ore. Consumer inflation also slowed down from March to April, driven mainly by electricity.
Although the rise in prices has lost strength among some specific groups, it is still quite widespread. This, combined with the lockdowns in China and interest rate hikes in the United States, could push inflation this year once again above 10%.
Article published by the newspaper The State of São Paulo states that, if that happens, it will be the first time since the beginning of the Real Plan that inflation will be above double digits for two consecutive years.
United States and commodities
On the external scene, data from the United States are in the focus of investors. According to the Bureau of Labor Statistics (BLS or Bureau of Labor Statistics, in free translation), the country created 428,000 jobs outside the agricultural sector in April.
The unemployment rate, in turn, remained at 3.6%. Both results came in above expectations. The Refinitiv consensus projected the creation of 391,000 jobs and expected the unemployment rate to stay at 3.5%.
Commodity prices are also on the market’s radar as they rise for the third straight session on Friday, ignoring concerns about global economic growth. At around 9:35 am ET, the Brent futures contract was up 1.42% to $112.51, while WTI was up 1.27% to $109.63.
Audit, exemption for foreigners and Petrobras
In the political arena, President Jair Bolsonaro (PL) said yesterday (5) that his party will hire a company to audit the Brazilian electoral system. He also stated that the Superior Electoral Court (TSE) will be “in a very complicated situation”, if the company concludes that the system is not auditable – which the court rejects.
Also on the political scene, the newspaper Economic value today brings that the government asked Congress to include in the guarantee framework bill (PL 4188/2021) an income tax exemption for foreign investments.
The exemption would focus on corporate fixed income securities, such as debentures, incentivized debentures, Certificates of Real Estate Receivables (CRIs) and Agribusiness Receivables (CRAs). The measure, according to the newspaper, is an attempt to attract external resources and reduce the dollar exchange rate, in addition to reducing the cost of raising funds by companies (by also reducing the cost for those who invest).
Also noteworthy are news involving Petrobras. Shortly before the release of the results of the oil company (PETR3;PETR4), President Jair Bolsonaro made appeals for the company not to raise fuel prices in Brazil again.
Screaming, during a live broadcast on social media, the president said that the profits recorded recently by the company are “a rape”, benefit foreigners and who pays the bill is the Brazilian population. However, he ruled out interfering with the company.
“If you have one more raise (in fuel prices), can break Brazil. And the people at Petrobras don’t understand, or don’t want to understand. We know they have laws. But we appeal to Petrobras not to raise prices,” said Bolsonaro, who also called the state-owned company’s profit “abusive” and classified it as a “crime”. “If fuel prices increase again, Petrobras’ name will go down in the mud,” he added.