The yield on the Brazilian 10-year government bond was around 11.07%, retreating from the over two-month high of 11.39% touched on August 21, tracking lower US Treasury yields amid Federal Reserve's pause hopes. Locally, the backdrop of decelerating inflation in the Brazilian economy suggests the potential for the central bank to extend its relatively dovish momentum. July's core and services price data showed a consistent trend towards disinflation, aligning with market expectations that the Brazilian Central Bank might extend its rate-cutting path in its upcoming September meeting. The central bank surprised with a larger-than-anticipated 50 basis points cut in August, lowering the interest rate to 13.25% and ending a year-long hold at 13.75%. These policy shifts have led to market forecasts of a year-end Selic rate of 12%.
Historically, the Brazil Government Bond 10Y reached an all time high of 1401 in December of 2022. Brazil Government Bond 10Y - data, forecasts, historical chart - was last updated on August of 2023.
The Brazil Government Bond 10Y is expected to trade at 11.37 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 11.92 in 12 months time.