Brazil 10-Year Yield Rises as Fiscal Adjustment Bill Disappoints
The yield on the 10-year Brazilian government bond rose to around 15.37%, remaining near the ten-year high of 15.75% reached on November 3, as the government’s fiscal adjustment proposal disappointed markets. Markets had previously welcomed the news as an initial step toward a more robust fiscal agenda, but now view the bill as a timid adjustment. The measures are understood not to focus on structural adjustments to reverse the growing public debt trajectory, but rather on opening more room for spending freezes to reach the 0.5% of GDP surplus target for 2027. Meanwhile, annual inflation rose to 4.63% in October from 4.58% in September, below market expectations of 4.74% but marking a four-month high and remaining above the BCB’s 4.5% target ceiling. With inflation still above target, the BCB is expected to remain cautious about resuming its Selic easing cycle.
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The yield on the 10-year Brazilian government bond rose to around 15.37%, remaining near the ten-year high of 15.75% reached on November 3, as the government’s fiscal adjustment proposal disappointed markets. Markets had previously welcomed the news as an initial step toward a more robust fiscal agenda, but now view the bill as a timid adjustment. The measures are understood not to focus on structural adjustments to reverse the growing public debt trajectory, but rather on opening more room for spending freezes to reach the 0.5% of GDP surplus target for 2027.
Meanwhile, annual inflation rose to 4.63% in October from 4.58% in September, below market expectations of 4.74% but marking a four-month high and remaining above the BCB’s 4.5% target ceiling. With inflation still above target, the BCB is expected to remain cautious about resuming its Selic easing cycle.