Direct Treasury: On another day of high volatility, general bond prices are advancing with risk aversion, oil and commodities

General bond prices are running higher on Tuesday afternoon (12). For fixed-rate bonds, rates go up by up to 12 basis points.

According to Flavio Serrano, Chief Economist at Greenbay Investimentos, interest rates fell during the day due to the positive surprise with the US Consumer Price Index (CPI).

The CPI accelerated and rose 1.2% in March, in line with market expectations. “But core inflation came in better than expected, with lower used car rental rates,” says Serrano.

However, the economist notes that throughout the day, risk aversion was growing due to escalating tensions in Russia, and rising oil and commodity prices. The dollar lowered its decline and interest rates rose.

On the market’s radar, Serrano cites the Congressional voting agenda on emergency aid highlights, in terms of increasing the value or making the aid permanent, which could have implications for future hearings on interest.

Within direct treasury, medium-term fixed rate securities had the highest rate increase. The 2029 flat rate Treasury offered an annualized return of 11.92%, up from the 11.80% seen on Monday (11).

Whereas, fixed rate treasury 2025 and fixed rate treasury 2033, at semi-annual interest, provided annualized returns of 12.10% and 11.98% respectively higher than 12.05% and 11.87% for the previous cycle.

In inflation-linked bonds, the largest increase in rates was in 2035, 2045 and 2055, which advanced 7 basis points.

IPCA + 2035 Treasury and IPCA + 2045 provided a real return of 5.61% at 3:20 pm, up from the 5.54% recorded yesterday.

Treasury IPCA + 2055, with semi-annual interest, showed a real gain of 5.74%, up from 5.67% in the previous session.

For the second day in a row, trading on Treasury Direct was suspended early in the morning. The outage on Tuesday (12) took more than an hour. A trading halt occurs to prevent an investor from closing transactions that do not properly reflect market conditions.

Check prices and quotes for all public securities available for purchase from Treasury Live shown on Tuesday afternoon (12):

Services in Brazil

The Brazilian Institute of Geography and Statistics (IBGE) announced this Tuesday (12) that Brazilian service sector It fell 0.2% month over month, disappointing market expectations that had been expecting 0.8% growth. In addition, the International Statistics Institute (IBGE) announced that the services sector decreased in January by 1.8% compared to December, and not 0.1%, as previously reported.

In 2020, the service sector represented about 70% of Brazil’s GDP. After a small period of optimism in recent months, with appreciation goods And the riyal, some analysts already expect the upward adjustments to stop.

The data from the Monthly Services Survey (PMS) was negatively surprising. The negative tone of the result comes not only from the unexpected drop in February, but also from the January data revision,” comments Luca Mercadante, economist at Rio Bravo Investimentos.

Mercadante notes that the performance of information services and “other services” negatively affected the index – the two activities subsequently decreased by 1.2% and 0.9%.

It also indicates that the services provided to families were practically zero to zero, with an increase of 0.1%, while a stronger progress was expected, due to the decrease in cases and deaths caused by Covid-19. “Even with the end of the effects of the Omicron wave seen in January, services are still feeling the decline in real income caused by higher inflation and the effects of monetary policy conducted last year,” he says.

On the other hand, Goldman Sachs welcomes the small expansion in the family services sector. “We expect that some of the service sectors still affected by Covid (particularly services to households) will recover further in the coming months, along with further progress in the Covid scenario and renewed fiscal stimulus,” they comment.

CPI

On the international scene, the most important thing is numbers United States CPIWhich accelerated and rose 1.2% in March compared to February, in line with expectations, according to data released by the Department of Labor on Tuesday (12), after advancing 0.8% in the previous month. The increase was 8.5% year-on-year.

Core inflation (which does not include food and energy) in turn rose by 0.3% in March compared to February, which was lower than expected. In the annual comparison, the highest level was 6.5%.

The Refinitiv consensus indicated an increase of 1.2% in the full index month-on-month and 8.4% in the annual comparison.

As for the bottom line, the forecast was a 0.5% advance compared to February, resulting in an expected 6.6% increase over the same period in 2021.

petroleum

Global oil prices accelerated on Tuesday, reversing a statement from the Organization of the Petroleum Exporting Countries (OPEC), which lowered the outlook for global oil demand growth. The reasons cited were the impact of Russia’s invasion of Ukraine, the progression of inflation and the exacerbation of COVID-19 in China.

West Texas Intermediate crude for May delivery rose 6.63% to $100.54 at 2:45 pm; While Brent crude for June rose 6.15% to $104.54.

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