Futures Interest Rates Slightly Decline Ahead of Central Bank Decision amid Global Factors and Election Expectations

Interest rates futures in Brazil experienced a slight decline at the close of today’s trading session, influenced by global factors and expectations surrounding upcoming elections. While a reduction in the Selic rate by the Central Bank was widely anticipated, market players focused on other global developments that impacted future interest rates. Notably, recent negotiations between the United States and Iran for reopening the Strait of Hormuz have alleviated geopolitical risks and positively affected global markets. Additionally, new election polls suggest a more competitive race than previously expected. A Genial/Quaest survey indicated that in a hypothetical first-round scenario, former President Lula would lead with 39% of voter intentions against Flávio Bolsonaro's 30%, while in the second round these percentages would be 44% and 39%, respectively. This result contrasts with previous Genial/Quaest findings, reflecting significant shifts in voter preferences for the presidential election. Internationally, the most affected contracts were those maturing in 2027 and 2028, which saw reductions in their interest rates directly reacting to these new electoral data.

Source: Valor Econômico