Brazilian interbank deposit futures rose on Friday after Federal Reserve Governor Kevin Warsh signaled that the U.S. central bank still has ‘work to do’ to ensure underlying inflation is sustainably returning to target.
The DI contract maturing in January 2028 advanced 6 basis points to 13.825%, while the January 2035 contract gained 3 basis points to 14.51%, according to B3 data tracked at 11:31 a.m. Brasília time. The remarks came during a speech at the Jackson Hole Symposium, where Warsh emphasized the Fed’s mandate to restore price stability.
The 2-year U.S. Treasury yield climbed 7 basis points to 4.306%, reflecting a repricing of interest-rate expectations. Market pricing via the CME FedWatch Tool showed the probability of a 25 basis-point rate hike at the Federal Reserve’s September meeting rising to 43.5% from 35.7% earlier in the session, as investors reassessed the path of U.S. monetary policy.
In Brazil, producer prices fell 0.83% month-on-month in July, the statistics agency IBGE reported. The annual increase moderated to 1.94%, down from prior readings, signaling tentative disinflationary pressure in the industrial sector. The real-time data release coincided with heightened sensitivity to global policy signals.
The dollar strengthened against the Brazilian real, trading above R$5.205, as the shift in U.S. rate expectations supported the greenback. The moves in DI futures also reflected positioning ahead of domestic economic indicators, including the July Caged employment data scheduled for release later in the afternoon.
The Copom options market on B3 showed an 88.5% probability of a 25 basis-point cut in the Selic rate at the central bank’s next meeting, down from 92.1% a week earlier, while the probability of maintaining the benchmark rate at 14% rose to 10.9%. For November, the odds of another 25 basis-point reduction stood at 41.1%, with a 43.5% chance of holding the rate steady.
