Brazilian public bond yields have risen sharply since President Lula’s re-election, and the Central Bank has halted its cycle of Selic rate cuts. The bank kept the benchmark Selic rate at 13.75 percent last week. Specialists quoted by InfoMoney now advise investors to enter bonds gradually rather than all at once.
Fiscal worries drive the move
The shortest-term inflation-linked bond, known as IPCA+, now yields a real 7.82 percent. Its rate rose from IPCA+ 6.72 percent over two weeks. The short-term prefixed bond yield was 12.90 percent before the rise and was above 15 percent last Friday, the 6th.
Maria Carolina Luchesi, an investment specialist at Hike Capital, said fiscal perception weighs more than the Selic on long-term bonds. Rate rises were attributed to that perception of fiscal risk rather than to the policy rate itself.
Inflation projections move higher
The Copom raised its 2026 inflation projection to 5.6 percent in its Wednesday statement. Its 2027 projection stands at 4.7 percent. Long-term IPCA+ bonds for 2040 and 2050 yield between 7.4 and 7.5 percent plus inflation.
The article’s estimate of a net return of 11.6 percent a year on post-fixed bonds after tax assumes a 15 percent income tax on investments held beyond two years.
Advice on timing and holding
Tadeu Arantes, head of allocation at Ghia Multi Family Office, called prefixed bonds the worst asset to hold at this moment. He said investors lock in a rate and can be eroded by rising interest rates.
Luchesi warned that selling now would turn a temporary loss into a permanent one. Upcoming events include Copom minutes on 10 November and a Copom meeting on 8 and 9 December.
Related: Brazil holds Selic at 13.75% after Lula's re-election · Brazil plans 0.5% of GDP surplus target for 2027 after Lula win
