DI rates closed Tuesday (2) at a low, reflecting the weaker than expected data on industrial production in Brazil and the expectation that the Federal Reserve will cut interest rates again in December.
The DI rate for January 2028 was 12.78% in the late afternoon, down 7 basis points compared to the adjustment of 12.846% in the previous session. At the long end of the forward curve, the rate for January 2035 was 13.06%, down 12 basis points from 13.178%.
At the beginning of the day, the IBGE (Brazilian Institute of Geography and Statistics) reported that below the 0.4% increase projected by economists in a Reuters survey.
Compared to October last year, there was a 0.5% drop in industrial production, against a projected increase of 0.2%.
Data from the sector, in the view of some analysts, reinforced the prospect that the Central Bank will begin to cut the Selic basic rate in January, currently at 15% per year. In reaction, DI rates fell.
“Industrial production grew very little, below projection. And as the market is looking for data like this to find a direction, any sign that the economy is slowing down could be beneficial for the interest curve”, said Rodrigo Salvador, partner at Opensolo Capital.
The negative bias for future rates in Brazil was reinforced by the external scenario, with assets pricing close to a 90% probability of the Federal Reserve cutting interest rates by 25 basis points next week, according to the CME FedWatch Tool.
In the market, the view is that a possible interest rate cut by the Fed next week increases the chances of a reduction in the Selic rate in January.
In this scenario, the DI rate for January 2028 reached an intraday low of 12.755% at 3:24 pm, a drop of 9 basis points compared to the previous day’s adjustment.
“The market prices the start of the Selic cuts in January, but this week (Central Bank president, Gabriel) Galípolo made it clear that there may not be a cut in the next meetings”, highlighted Salvador. “We see the market pointing in one direction, but the feeling with Galípolo’s statements is different.”
On Monday, Galípolo repeated during an event in São Paulo that inflation expectations and projections “fall much less than we would like”.
In Brasília, the CAE (Economic Affairs Committee) of the Senate approved this Tuesday afternoon a bill that increases taxation on the distribution of JCP (Interest on Equity), online betting and fintechs. The project has a terminative process, which means that it can be sent directly to the Chamber.
Abroad, on a day with an empty agenda, Treasury yields fell slightly in the late afternoon.
At 4:36 p.m., the two-year Treasury yield — which reflects bets on the direction of short-term interest rates — was down 2 basis points, at 3.516%. The return on the ten-year bond — a global reference for investment decisions — fell 1 basis point, to 4.085%.
