Treasury Direct: pension bonds make their debut with rates up to 6.45% per annum; the market awaits Copom

Monday (30) opens with investors awaiting a battery of monetary policy decisions, with emphasis on those of Brazil and the United States, which will be announced next Wednesday (1).

Most analysts expect the Central Bank’s Monetary Policy Committee (Copom) to keep the interest rate unchanged at 13.75% per annum. According to XP’s economics team, the statement released after the meeting shouldn’t be much different from the last version, since the balance of risk has remained the same since the last meeting.

One of the points that should be emphasized by Copom is the concern about the increase in inflation expectations in the medium term. Today’s Focus Report unveiled new hikes in projections for 2023, 2024 and 2026.

The political scene was also highlighted, with the election of the group leaders of the Senate and Chamber, as well as the return of Congress after the parliamentary break.

The week is also decisive for the Federal Reserve (Fed, American central bank), which should slow down the pace of the monetary tightening that began last year. According to CME Group’s rate monitor, virtually 100% of analysts believe rates will increase by 25 basis points (0.25 percentage points), in the range of 4.50% to 4.75% annually .

Al Treasury Direct, Monday marks the start of negotiations for eight Treasury RendA+-denominated bonds, government bonds earmarked for retirement savings. At the premiere, the real rates offered reached 6.45% per annum, in the first update of the day.

Other stocks where the primary focus is not on retirement are trading with rates declining early this morning. At around 9:50 am, the highest interest rate offered by fixed-rate bonds was 13.15% per annum, lower than the 13.19% offered by the 2029 fixed-rate Treasuries last Friday (27).

Inflation-linked bonds, in turn, offered real yields of up to 6.47%, as was the case with the HICP+2045 Treasury. In the previous session, the percentage offered was 6.51%.

Consult the prices and rates of government bonds available for purchase at the Direct Treasury on the morning of this Monday (30):

Source: direct treasury

New Treasury Direct stock in area

In practice, the Treasury RendA+ is a bond similar to the Treasury IPCA+. Both guarantee the investor an interest rate plus the change in inflation, as measured by the Extended National Consumer Price Index (HICP).

The idea is that the investor can plan a retirement date, guaranteeing the receipt of monthly income for the next 20 years. There is the option to invest up to 40 years of accumulation, always followed by another 20 years of monthly income stream.

The difference between Treasury Renda+ and Treasury HICP+ is this: instead of receiving the entire application back on the maturity date, the investor will receive the amounts monthly. And since the payments are adjusted for inflation, it will ensure that purchasing power is maintained.

Focus report and no change in inflation target

Within the economic scenario, the focus is on the data from the Focus Report, which led to a new increase in inflation projections for 2023, 2024 and 2026. The estimate for 2025, in turn, has been maintained.

For this year, inflation expectations have risen for seven consecutive weeks. It went from 5.48% to 5.74% this week. Inflation for 2024 has gone from 3.84% to 3.90%. The projection for 2025 has been maintained at 3.50% and that for 2026 has increased from 3.47% to 3.50%.

For managed prices in particular, the HICP projection varied sharply over the week, rising from 7.25% to 8.39%. A month ago, the projection was 6.77%. For 2024 it went from 4.12% to 4.20% and, for 2025, from 3.58% to 3.67%. For 2026 it was kept at 3.50%.

With an eye to inflation targets, the newspaper Folha de S. Paulo brought today that the government has not – so far – any technical discussion to change the goals. The apprehension of financial agents focuses on the recent harsh criticism leveled by President Luiz Inácio Lula da Silva (PT) on the subject.

The greatest concern concerns this year and the next two years, in which the objectives are set respectively at 3.25% and 3%, with a margin of tolerance of 1.5 percentage points more or less.

The Gross Domestic Product (GDP) projection of the 2023 Focus Report rose from 0.79% to 0.80%, while that of 2024 remained at 1.50%, that of 2025 fell from 1.90 % to 1.89% and that of 2026 continued at 2.0%.

The base interest rate forecast for the Brazilian economy (Selic) has been maintained at 12.50% for this year and that for 2024 has remained unchanged at 9.50%. The one relating to 2025, at 8.50%, was also maintained. 2026 went from 8.25% to 8.50%.

The estimate for the dollar has decreased this year from BRL 5.28 to BRL 5.25, and has been maintained at BRL 5.30 for 2024, 2025 and 2026.

Petrobras: fuel prices

Still on the economic scene, investors are monitoring information that the new president of Petrobras (PETR3;PETR4), Jean Paul Prates, is counting on the creation of a fund to try to curb the rise in fuel prices at the pumps and reduce the impact of the volatility of petroleum derivatives, cooking gas and natural gas on the final consumer. Experts warn, however, that the mechanism should be limited to diesel due to the high cost to public purses.

Prates argues to his interlocutors that the so-called stabilization account mechanism – abbreviated to the acronym CEP-Combustíveis – would be the best short-term option for fuels. The mechanism would be able to provide an acceptable price for the final consumer, but without penalizing producers and importers, rewarded for the bill.

In the medium and long term, the solution assessed by Petrobras would be to increase the state’s refining capacity. This would reduce the Brazilian market’s exposure to international price fluctuations, as it would eliminate the dependence on imported derivatives.

Germany’s GDP and monetary policy decisions

On the external scene, Monday reserves the presentation of Germany’s gross domestic product (GDP), which fell 0.2% in the fourth quarter of 2022 compared to the third quarter, according to seasonally adjusted data released this Monday (30) by Destatis , the country’s statistics department. Refinitiv’s consensus indicated stability (0.0%) in the quarter.

The German economy grew by 1.1% compared to the same quarter of the previous year, while the forecast was +1.3%. After the German economy performed well in previous quarters, the decline in the fourth quarter reflected the decline in private consumption spending, according to Destatis. Eurozone Fourth Quarter GDP to be released tomorrow;

The week will also be marked by the battery of monetary policy decisions, starting on Wednesday with the Fed. Thursday (2), it will be the turn of the European Central Bank (ECB) and the Bank of England (BoE).

The ECB should keep its tone falcon (prone to monetary tightening) and raise interest rates by 0.50 percentage point.

On Friday (3), the highlight will be the US jobs report. The week will also be important for the fourth quarter 2022 earnings season overseas.

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