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Treasury Direct: bonds rise for the 4th day; fixed rates hit a new record and rates reach 12.78%

After a week of strong penalization of risk assets, Monday (9) brings new worrying data from China. The country’s export growth has slowed to single digits, which would be the weakest level in two years, while imports have barely changed amid lockdowns in China’s biggest cities.

The week also holds more inflation data from the United States. On Wednesday (11), the Consumer Price Index (CPI) comes out, and the Refinitiv consensus expects a positive monthly variation of 0.2% in April. On the following day (12), it is the turn of the producer price index (PPI), which, according to market projections, should advance 0.5% from March to April.

Official Brazilian inflation data for April will also be released this Wednesday (11). The day before, the minutes of the last meeting of the Monetary Policy Committee (Copom) will be released, which raised the Selic rate to 12.75% per year.

With the resumption of the strike by Central Bank employees, the release of the Focus Report will again be postponed and will not take place today. Also noteworthy is the readjustment announced by Petrobras in the price of diesel.

In Treasury Direct, the bond market recorded the fourth day in a row with high rates on Monday morning. Fixed rates drive the advance of returns, rising to 16 basis points (0.16 percentage points), as is the case with paper maturing in 2029.

At 9:20 am, the interest offered by this security was 12.71% per year, against 12.55% on Friday (6). This was the highest amount ever delivered by the 2029 Fixed Rate Treasury, which began trading in February this year.

Also remember the returns offered by the Fixed Rate 2025 Treasury and the 2033 Fixed Rate Treasury, with half-yearly coupon, which were, respectively, at 12.73% and 12.78% per year this morning.

Some papers with remuneration linked to inflation also approached the maximum returns already registered by the bonds at the same time. This is the case of the IPCA+ 2055 Treasury, with a half-yearly coupon, which offered a real rate of 5.86% per year in the first update of the day, compared to 5.80% seen on Friday (6). The highest real interest rate ever paid for this security to date was 5.93% per annum. The paper began trading in February 2020.

Check out the prices and rates of all public securities available for purchase at the Treasury Direct that were offered this Monday morning (9):

Source: Direct Treasure

IPCA

With the suspension of the disclosure of the Focus Report due to the resumption of the strike by Central Bank servers last Tuesday (3), attention turns to the Copom minutes, which are guaranteed to be published tomorrow (10), according to the monetary authority.

The market is looking for more clues about the next steps that should be taken by the BC, especially after the autarchy has highlighted that it should raise the Selic again – only this time, to a lesser extent, at the next meeting in June.

Official inflation data are also in the market’s focus. In Bradesco’s projections, the Broad National Consumer Price Index (IPCA) should rise 0.98% in April. According to the bank, despite the downward impact of the green flag on electricity prices, food prices and core components should continue to push the indicator upwards.

Itaú, on the other hand, forecasts a rise of 1.04% for the full month, which would take inflation in 12 months to 12.11% – for the bank’s analysts, April will be the peak of inflation in 2022.

Attention should also be paid to the impacts of rising fuel prices in the coming months. Petrobras announced this morning that it will increase the value of diesel for distributors from R$ 4.51 to R$ 4.91, a liter; readjustment is valid from tomorrow (10).

Gasoline and cooking gas prices will not change, according to the oil company.

Lula, minimum wage and elections

At an event held at a convention center in the north of São Paulo, former president Luiz Inácio Lula da Silva (PT) launched his pre-candidacy for the presidency on Saturday morning (7th).

In his speech, Lula evoked the legacy left by his governments and stated that his cause is “to restore the sovereignty of Brazil”.

Geraldo Alckmin (PSB), Lula’s running mate as a pre-candidate for vice presidency, made a speech broadcast online on a big screen, as the former governor of São Paulo was diagnosed with Covid-19 on Friday (6th). ).

Also noteworthy is the news from the newspaper The globe, which brought today that President Jair Bolsonaro (PL) will be the first president since the Real Plan to end his term with a minimum wage worth less. The calculations are by the consultancy Tullett Prebon Brasil, according to which the loss of purchasing power at the end of the government will be 1.7%.

Two factors explain the loss. One of them is the fiscal adjustment, due to the weight of the minimum wage in the indexation of the Union Budget, that is, readjustments in the floor have an impact on a range of other expenses, such as social benefits and pension expenses. The second is the acceleration of inflation, as shown in the newspaper.

China, commodities and war

On the outside scene, oil prices fell on Monday, along with stock markets, on fears that a global recession could dampen demand for oil.

Investors are eyeing the European Union’s talks on a Russian oil embargo that is expected to tighten global supply, as well as the possibility of waning demand in China, with lockdowns in several cities.

In the morning, the Central Bank of China (PBoC) released a quarterly report, in which it said it will not flood the Chinese economy with stimulus, but will offer localized support to sectors affected by the pandemic and seek to keep prices under control.

China’s export growth slowed again in April, this time reaching the lowest level in nearly two years. Exports advanced 3.9% in the month, in the inter-annual comparison, informed the country’s General Administration of Customs. The result was in line with the expectations of economists consulted by the The Wall Street Journal. In March, the growth was 14.7%.

Chinese imports, in turn, were stable (0.0%) in April, compared to the same period in 2021. Analysts forecast a decline of 3.0% in the month. In March, the criterion fell by 0.1%. China’s trade surplus totaled US$51.1 billion in April, up from US$50.3 billion projected by the market and US$47.38 billion computed in March.

Investors are also wary of the war in Ukraine. Today, Vladimir Putin, President of Russia, said that he does not want “global war”. Despite this, he returned to defend the invasion of the neighboring country and once again blamed the North Atlantic Treaty Organization (NATO) for the current situation.

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