Treasury IPCA+ disappoints investors and results in a loss of almost 4% in April; lost appeal?

Anyone who bought a long IPCA+ Treasury bond at the beginning of April and sold the paper at the end of the month suffered a loss of almost 4%. Public bond rates rose last month, which brought negative returns to investors in the safest securities on the Brazilian market.

The IPCA+ 2055 Treasury had an accumulated return of -3.86% in April, the worst among all those available for purchase on Tesouro Direto. The 2035 Fixed Treasury had a negative return of 3.14% in the period, showing that longer maturity bonds, known for their volatility, had the worst performances.

See the yields on bonds traded on Tesouro Direto in April and year-to-date:

For experts heard by the InfoMoneyHowever, the movement should not be repeated in May and the expectation is for positive profitability to return with a drop in rates. “A large part of the result (negative in April) has to do with the opening of American interest rates and the government’s stance of not meeting its own fiscal target”, says Kaique Fonseca, economist and partner at A7 Capital.

He also argues that the most important US Treasury bond, with a ten-year maturity, reached its 2024 high in April and has already fallen again, which should contribute to the closing of interest rates in Brazil in May.

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I bought it waiting for the drop; what to do?

It is common for investors to buy public bonds with fixed remuneration components after upward movements in rates, waiting for a drop to sell the securities at a profit. But the accumulated profitability of public bonds in the year reaches -9.4%

For Octávio Gomes, partner at AVG Capital, patience is needed, considering that we are still in a cycle of falling Selic rates and that the level of real interest that Tesouro Direto currently offers is not sustainable in the long term.

“There will be windows of opportunity where the mark-to-market of securities is positive, offering the investor the opportunity to exit early and make a profit”, says the expert.

Sharon Halpern, partner and private banker at Blackbird Investimentos, agrees and says that there is expectation for this window “due to several structural reforms that Brazil has been carrying out”.

Good time to buy?

With rates still at high levels, experts see a window of opportunity to buy public bonds. If the investor is more conservative, the recommendation is to bet on post-fixed securities or shorter securities, if they have pre-fixed components in the remuneration: “they are less impacted by mark-to-market”, explains Gomes.

For A7 Capital, shorter fixed-rate assets, with maturities between one and three years, “have a high probability of yielding more than post-fixed assets”, according to Fonseca.

Bonds linked to inflation, despite recently suffering from mark-to-market, continue to be preferred by analysts: “they are the safest choice for the investor, even more so when we find rates in the range of IPCA + 6% per year”, says Halpern .