The weaker than expected numbers on the United States labor market in April gave room for rates on Interbank Deposit (DI) contracts to continue the downward movement that began yesterday, driven by the low probability of a new increase in American interest rates , but they were not enough to remove from the curve the bet that the Monetary Policy Committee, the Copom, will reduce the Selic by just 0.25 percentage points next week.
Although over the last few trading sessions DI rates have shown strong fluctuations, in the accumulated result for the week they have had little variation. On the short end, the variation was less than 10 basis points, while on the long end it hovered just above 15 points.
One of the factors that limit rate losses is the domestic component, according to Vinícius Romano, head of fixed income at Suno Research. “We are looking a lot at the external scenario, but there is this additional factor, which would be fiscal,” he said, referring to the market’s doubts about the government’s ability to meet the primary result targets.
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This factor, added to external uncertainty, prevents investors from abandoning the bet that the Copom will reduce the Selic by 0.25 percentage points next week – although at the moment there is an almost balance on the curve between the pricing of this cut and a more intense, of 0.50 percentage points, which was in the committee’s original plan.
Marcelo Boragini, partner and variable income specialist at Davos Investimentos, points out that the market faces “very great difficulty” in predicting the behavior of the economy. Caio Schettino, head of allocations at Criteria, highlights that the Copom’s next decision is “open” and, given the difficulty it will impose on the collegiate, it could serve to understand the profile of the new composition of the Central Bank’s board of directors.
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Romano believes that the Copom will follow the original plan and announce a cut of 0.50 percentage points, but keep the Selic’s future trajectory open to have more flexibility. Boragini expects a reduction of 0.25 points.
The Interbank Deposit (DI) contract rate for January 2025 fell to 10.170%, from 10.201% in yesterday’s adjustment. The rate for January 2026 fell to 10.355% from 10.431%, and the rate for January 2027 fell to 10.655% from 10.756%. The rate for January 2029 fell to 11.160% from 11.278%.
