Treasury Direct: after suspension, fixed rates reduce hikes on days of high price and interest rate volatility

Treasury Direct negotiations underwent a further refresh this Monday morning (23rd) after a quick suspension earlier in the day. The interruption occurred due to the strong volatility of interest rates and prices.

When business resumes, around 10:20, the public bond market operates with a mixed movement: fixed bonds register a drop in rates, while bonds anchored to inflation show mostly stability.

In the second update of the day, the maximum yield offered by area codes was provided by the card with a 2029 maturity, equal to 13.08%, lower than the 13.18% per year seen at the start of the day and the 13.15% seen in the previous session.

Inflation-linked bonds, in turn, produced real returns of up to 6.44%, as was the case with the HICP+2045 Treasury. The percentage is lower than the 6.48% at the start of the day and is in line with the 6.43% recorded on Friday.

The creation of a common currency between Brazil and Argentina – one of the topics that generated concern among financial agents over the weekend after the publications on the matter in the international media – has returned to concern investors on Monday.

Questioned this morning in Buenos Aires, during a trip with the entourage of President Luiz Inácio Lula da Silva (PT), the finance minister, Fernando Haddad (PT), tried to clarify the confusion surrounding the issue, stating that the debate involves the creation of a common virtual currency – and not a single currency, along the lines of the euro.

Haddad said the currency seeks to “boost” trade between countries and would not lead to the demise of the Argentine real or peso. The mixed statements on the matter should add more volatility to the markets this session.

Attention should also be paid to the further deterioration of inflation projections this year and in 2024, presented today in the Central Bank’s Focus Report.

Consult the prices and rates of public securities available for purchase at the Direct Treasury on the morning of this Monday (11pm):

Source: direct treasury

Single currency and trip to Buenos Aires

The confusion over the issue arose after an article jointly signed by Lula and the president of Argentina, Alberto Fernández, confirmed plans to create a common South American currency for commercial and financial transactions. The text signed by the heads of state, on the eve of the first bilateral meeting between the presidents of the two countries in more than three years, was published yesterday (22) in the Argentine newspaper Profile.

A statement by the Minister of Economy of Argentina, Sergio Massa, al ft, this Sunday (22), added fuel to the fire by stating that the two countries have created study groups for the adoption of a currency that could be extended to other countries in the region, similar to what happened with the euro. According to the newspaper Economic valuethis was not considered in Brasilia.

According to the newspaper, what the two governments are now discussing is the creation of a digital currency for financial and commercial transactions. The confusion, says the newspaper, would be between the terms “common currency”, which would be the virtual one, and “single currency”, along the lines of the euro, which has generated a debate within the government on how to communicate on the subject.

On his first international trip to Buenos Aires under the new government, Lula will meet Fernández, sign bilateral agreements and meet businessmen. You will also participate in the summit of the Community of Latin American and Caribbean States (CELAC), a collegial body that Brazil rejoined after withdrawing during the government of Jair Bolsonaro.

After the visit to Buenos Aires, Lula went to Montevideo, the capital of Uruguay, also on an official visit. The president’s agenda in the country of Platinum has not yet been confirmed, but, in addition to the bilateral meetings, a new meeting with the leader of the left and former Uruguayan president José Pepe Mujica is scheduled.

Focus Bulletin

On the economic scene, financial market analysts maintained this week’s upward trend in their projections for inflation in 2023 and 2024, according to data released this Monday (23) by the Central Bank’s Focus Report.

For this year, the National Extended Consumer Price Index (HICP) estimate rose for six consecutive weeks and reached 5.48%, up from 5.39% last week. The inflation projection in 2024 has increased from 3.70% to 3.84%. That of 2025 remained at the same 3.50% expected a week ago and that of 2026 went from 3.22% to 3.47%.

Tomorrow the Extended National Consumer Price Index -15 (HICP-15) will be presented, considered the preview of the official inflation. The data will refer to January. The expectation is for a slowdown compared to the 0.52% increase recorded in December 2022, in the evaluation of Bradesco analysts.

According to the house, the deceleration should reflect less pressure from administered prices (fuel and energy). Furthermore, professionals believe that services should be left aside, which should lead to the accommodation of centres. The data could prompt economists to recalibrate their projections for the year.

The projection of the Gross Domestic Product (GDP) for 2023, according to the Focus Report, went from 0.77% to 0.79%, while that of 2024 remained at 1.50%, that of 2025 remained at 1.90% and that of 2026 continued at 2.0%.

The base interest rate forecast for the Brazilian economy (Selic) has held at 12.25% for this year, but that for 2024 has risen from 9.25% to 9.50%. That of 2025 also advanced, from 8.25% to 8.50%.

Fire fed

Meanwhile, on the external scene, global markets have mulled over the possibility that the Federal Reserve is preparing to slow the pace of its rate hikes to fight inflation after last week’s economic data showed falling domestic prices. wholesale and retail sales.

Market participants are also absorbing the comments made on Friday (20) by Fed Governor Christopher Waller, who said he was in favor of a 0.25 percentage point increase at the February 1 meeting, when the monetary authority will present the next interest rate policy update . Waller also said that rates are already high enough to slow the economy.

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