Tesouro Direto yields opened lower across all maturities on Monday (9), the first trading session after President Luiz Inácio Lula da Silva’s national broadcast address on Sunday evening. Inflation-linked bonds fell the most, while prefixed bonds moved less.
Tesouro IPCA+ 2032 and Tesouro IPCA+ 2040 both declined 7 basis points from Friday’s close (6). Tesouro IPCA+ 2032 opened at 7.75 percent per year plus inflation. Prefixed bonds fell between 2 and 3 basis points at the open, with Prefixado 2032 opening at 15.08 percent.
Address fell short on measures
Lula’s address was his first in a national chain since his re-election on 25 October. He reaffirmed fiscal responsibility, said public debt and high interest rates worry him, and said the government will act to create conditions for reducing the Selic. He announced no measures and repeated campaign promises.
Sérgio Vale, chief economist at MB Associados, said the speech was constructed so that 99 percent of the discourse moved toward increasing spending. Roberto Troster, former chief economist at Febraban, said Lula only announced more spending.
Decisions deferred until November
Decisions on fiscal measures are deferred until Lula returns from international travel scheduled to end 15 November. Finance Minister Dario Durigan and Planning Minister Bruno Moretti will present proposals then. Copom kept the Selic at 13.50 percent on Wednesday (4).
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The Boletim Focus survey revised its projection for the end-2026 Selic to 13.75 percent from 13.50 percent, and its 2027 IPCA projection to 4.90 percent from 4.76 percent. Separately, Donald Trump told CNN on Sunday that new strikes on Iran are highly unlikely if negotiations advance; oil fell and the dollar weakened against both strong currencies and the real, while US Treasury yields held stable ahead of the October CPI reading due Tuesday (10). US annual inflation stood at 3.7 percent in September, near its 31-day high.
Related: Brazil bond yields climb after Lula's re-election, Selic held at 13.75% · Brazil plans 0.5% of GDP surplus target for 2027 after Lula win
Source: Tesouro Direto | Data: FRED — St. Louis Fed
