Brazilian interest rate derivatives ended the session with modest variations on Wednesday after the release of mid-August inflation data and U.S. economic indicators.
The DI contract maturing in January 2028 closed at 13.815%, nearly unchanged from the prior session’s 13.813%, after fluctuating between 13.735% and 13.865% intraday. The longer-dated DI for January 2035 fell 2 basis points to 14.44%, compared with 14.459% previously.
Brazil’s IPCA-15 inflation index declined 0.40% in August, reversing July’s 0.06% increase and undershooting market expectations of a 0.30% drop. Underlying services inflation accelerated, with the subcomponent rising to 0.50% from 0.30% a month earlier, while labor-intensive services climbed to 0.55% from 0.48%. General services inflation slowed sharply to 0.07% from 0.41%. The central bank’s core inflation averages edged up to 0.22% from 0.20%. Food at home prices fell 0.97% in August, extending July’s 1.14% decline.
U.S. data showed the 10-year Treasury yield rising 2 basis points to 4.66% by late afternoon, while the core PCE index increased 0.2% in July, matching forecasts. The broader PCE index also rose 0.2%, lifting the 12-month rate to 3.7%, above the 3.6% consensus. Second-quarter U.S. GDP growth was confirmed at 1.5%, in line with expectations.
Brazil’s federal public debt expanded 0.22% in July to R$9.289 trillion, while the Treasury adjusted its bond issuance mix for the year. The share of Selic-linked bonds was raised to 49%–53% from 46%–50%, while inflation-linked bonds were trimmed to 21%–25% from 23%–27%. Fixed-rate bond expectations were lowered to 20%–24% from 21%–25%, reflecting volatility in local and global markets.
Economists noted the mixed signals from the IPCA-15 release. Flavio Serrano, chief economist at Banco BMG, said markets initially reacted to the headline surprise but later stabilized as the breakdown showed limited deviation from expectations, with core services still running above forecasts. Leonardo Costa of ASA highlighted that core inflation components performed better than anticipated despite the acceleration in underlying services, which remained near 4.6% on a three-month annualized basis. He added that goods inflation continued to ease, partly reflecting normalization following the post-oil shock adjustment.
