Treasury Direct: after the end of the negotiations, the interest on the bonds decrease; highlight is preceded by 2029 with a yield of 12.50% per annum

Treasury Direct trading in Treasury Direct resumed operations at 3.27pm, after an outage of approximately forty minutes. The suspension took place due to the strong volatility of prices and tariffs.

The possibility of new coup attacks, like the one that happened in Brasilia on Sunday (8), when the coup plotters invaded the headquarters of the Three Powers in the federal capital, puts the market on alert. But for investors, the moves by the authorities to neutralize anti-democratic movements prove to have more force.

Minister Alexandre de Moraes, of the Federal Supreme Court (STF), ruled, this Wednesday (11), that public authorities throughout the country prevent any attempt to block public roads or highways and occupy public spaces and buildings.

The market awaits the economic announcements of the Minister of Finance, Fernando Haddad, which should be made between tomorrow (12) and Friday (13). According to the newspaper The State of Sao PauloHaddad hopes to get Lula’s backing to raise the cost of petrol and alcohol starting in March.

Ricardo Cappelli, federal intervener in the security of the Federal District, said this Wednesday (11) that “there is no possibility that something like this will happen” to what we saw in Brasilia last Sunday. Cappelli’s statement was in response to questions about social media messages from former President Jair Bolsonaro’s (PL) supporters calling on people to fresh attacks on democracy possibly today. According to the intervener, preventive measures have already been taken.

Service data is also on the radar. On the external front, agents await the US December consumer price index (CPI), which will be presented tomorrow (12).

Following the end of the negotiations, government bonds recorded a drop in interest rates. At 15:27, the maximum yield offered by the prefixes was paid by the 2029 Prefixed Treasury, in the amount of 12.50% per annum, a percentage lower than the 12.77% of the previous session.

In the case of inflation-linked bonds, the highest real remuneration was offered by the HICP+2045 Treasury, at 6.26%, lower than yesterday’s 6.31%.

“Due to the demonstrations that took place in Brasilia over the weekend, many people expected a more pessimistic and stressed market, but in reality it hasn’t happened. The week was “quiet”. And there are several points that affect inflation in Brazil. We also have market influence in the United States. Tomorrow we will know what the US consumer price index will be. You can understand why the market is the way it is,” says Vinicius Romano, fixed income specialist at Suno Research.

Check out the prices and rates on government bonds available for purchase at Treasury Direct this Wednesday afternoon (11am):

Source: direct treasury

Sign Lula and new coup acts

In the political scene, investors control the news of the newspapers The State of Sao Paulo that the go-ahead for the return of federal taxes on gasoline and ethanol, starting in March, is expected from the Finance Ministry in the first package of measures to be announced by the government.

According to the newspaper, the backbone of the package follows the same simulations leaked to the press with a focus on increasing revenue. The newspaper also reports that Lula instructed Haddad to present the measures later this week as an “empowerment” measure to dispel the perception that there would be a delay in the government’s agenda after last Sunday’s coup (8).

With an eye to new threats to democracy, the Lula government called the STF yesterday (10), after noting the threat that extremist groups are calling for new coup protests this Wednesday, according to the newspaper. The Globe and the Estadão.

The “National Mega Demonstration for the Resumption of Power” is expected to take place in all capitals, including the Esplanada dos Ministérios, in Brasilia, the scene of terrorist attacks that led to the looting of the Congress, the Planalto Palace and the headquarters of the STF.

According to the Advocacy-General of the Union (AGU), calls for protests against the coup circulated mostly on Telegram. The AGU requests Minister Alexandre de Moraes that all authorities take adequate measures to prevent the invasion of public buildings and the obstruction of urban roads or highways.

BC charters and services

On an economic level, the market echoes the open letter to the Minister of Finance, Fernando Haddad, to justify the failure to meet the 2022 inflation target.

In the document, the president of the Central Bank, Roberto Campos Neto, argued that exceeding the target was a “global phenomenon”, citing the impacts of the war in Ukraine on the prices of raw materials and industrial goods, also considering the effect of covid zero policy in China.

“Pressures from commodity prices and global supply chains have reflected changes in consumption patterns caused by the pandemic, with a proportionately greater share of demand directed to goods and driven by expansionary policies, and, in the case of 2022, have been aggravated by the outbreak of war in Ukraine”.

Campos Neto also acknowledged that inflation in 2023 is expected to remain above the set target (4.75%) considering his conditional projection of 5.0% for this year. But, considering the projections for 2024 (3.0%) and 2025 (2.8%), the BC argues that the “scenario is that of convergence of inflation to its objectives”.

Also on the economic scene, investors are watching services data presented today by the Brazilian Institute of Geography and Statistics (IBGE).

Retail sales fell 0.6% in November compared to October, according to data released today. It is the first time that retail has been in the negative field since July 2022 (-0.2%).

From January to November, retail grew by 1.1% and, in the last 12 months, by 0.6%.

Of the eight businesses surveyed, six had negative results in November.

the title is gone

The New Year also brought changes in the direct treasury, which replaced some short-term securities with longer-term ones.

In all, there were four replacements: Prefixed Treasury 2026 (formerly Prefixed Treasury 2025), Selic Treasury 2026 (formerly Selic Treasury 2024), Selic Treasury 2029 (formerly Selic Treasury 2027) and HICP+ Treasury 2029 (formerly HICP+2026 Treasury).

For each security and index, Fazenda Direto adopts specific minimum maturity references. When this period of securities available for purchase is less than the minimum set by the platform, it “rolls” the card.

With the change, one of the questions investors may be asking is what changes in practice for them. The difference is that the salaries that were available up to that point will no longer be available. Therefore, those who want to buy will not find those securities, but others with slightly different maturities.

Powell and abroad

On the external scene, Federal Reserve Chairman Jerome Powell said on Tuesday (10) that restoring price stability with high inflation may require unpopular measures.

The speech did not provide direct clues about the direction of monetary policy from a central bank that has raised interest rates seven times in the past and indicated that further hikes are likely this year. But the expectation is that the Fed will raise interest rates by a smaller amount at its February meeting.

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