You interest on pre-fixed Treasury Direct bonds began to rise on the Tuesday (30) before the Super Wednesday.
On Monday, the maximum pre-fixed rate reached 10.57%. On Wednesday, at the time of writing this report, the Prefixed Treasury with half-yearly interest rates in 2033 had already achieved a profitability of 10.63% per year.
The market expectation for Super Wednesday is that the Monetary Policy Committee (Copom) make a 0.5 percentage point cut in Seliclowering the rate to 11.25% per year.
In the United States, the Fed maintained the Fed Funds at current levels, with a tougher tone in its statement, indicating that the cuts will not happen for now.
But with the expectation of a lower Selic on the radar, what explains the increase in the rate of return for new prefixes? Is it time to invest in fixed income?
Understand why prefixed interest rates rose before Super Wednesday
According to Matheus Spiess, an analyst at Empiricus Research, three factors explain why interest rates on fixed-rate bonds rose this week:
- The dissemination of data from the IPCA-15;
- The risk aversion caused by decision-making monetary policy; It is
- O political noise in government fiscal debates.
Firstly, the data from the preview of the inflationreleased last week, were below market expectations, even though they indicate a slowdown in price increases. In the words of Matheus Spiess:
“Although it came in at a lower-than-expected number, qualitatively it fell short of what was desired, it was bad data. This puts pressure, especially on the shortest points of the interest curve”
The analyst also says that it is common for risk aversion to increase in periods of monetary policy decisions, another factor that pushes up the profitability of pre-fixed rates.
“Although it came in at a lower-than-expected number, qualitatively it fell short of what was desired, it was bad data. This puts pressure, especially on the shortest points of the interest curve,” she says.
Finally, another issue that puts pressure on the profitability of fixed-rate securities is the discussion surrounding the revision of the fiscal target, which should gain strength after the release of data from the deficit December primary, which represents around 1.5% of GDP.
Faced with uncertainty, investors place more premium on the interest rate curve, according to Matheus Spiess, which explains the appreciation in fixed rate returns this week.
And now? Is it time to invest in fixed income?
Regardless of the levels reached by the Selic, it is possible to seek interesting returns in fixed income.
According to Laís Costa, fixed income analyst at Empiricus Research, 2024 will continue to be an interesting year for fixed income – and now is a good time to invest and seek consistent yields above inflation.
Laís selected 4 fixed income securities to invest in now. Normally, this list of recommendations would be restricted to subscribers of Empiricus Research series, but by clicking on any link in this text, you can unlock your access free.
The recommendations were designed for those looking to make money in the long term, with a structural strategy, investing in low-risk assets without giving up good profitability.
And to repeat: you don’t pay anything to check out the titles that Laís Costa hand-selected.
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