Direct Treasury: Advance interest rates hit a record high after measures were announced to cut fuel prices

Interest rates offered by public bonds run higher on Tuesday morning (7). Most returns offered by fixed-rate securities are at a record high, as is the case for fixed-rate treasury 2029 and 2033.

In the first update in the morning, the paper maturing in 2029 delivered an average annual rate of 12.73%, up from the 12.56% seen the day before (6). At the same time, the previous Treasury 2033, at semi-annual interest, offered a bonus of 12.83% per annum, up from the 12.70% recorded yesterday.

Bond trading began in February of this year.

Among the inflation-related papers, the highest real interest was delivered by Treasury IPCA + 2055, at 5.89% per annum, higher than the 5.84% seen yesterday.

The biggest advance among the fixed-rate paper is the result of yesterday’s announcement by the federal government that it is willing to compensate states for any revenue losses. The goal is for the Conservatives to accept zero ICMS tax on diesel and cooking gas.

The government has also committed to lowering other federal tax rates (PIS/Cofins and Cide) on gasoline and ethanol, which will seek to increase pressure to pass a bill that sets a 17% cap on ICMS on a series of clauses.

In a report sent to clients, Jason Vieira, chief economist at Infinity Asset, emphasized that the short-term inflationary impact of such projects was “undeniable”. “However, the financial cost of the Treasury results will certainly put more pressure on interest rates,” he defended.

In his analysis, the House’s chief economist said the compensation announced by Bolsonaro was done without an alternative source, as required by law, and that the government has shown it is looking at unconventional alternatives to lower fuel prices.

On the outside arena, investors are awaiting the release of more inflation indicators for consumers in the US, which will be shown on Friday (10) and watching the decline in US bond yields (treasury bonds), after the strong rise recorded the previous day.

Check the quotes and prices of all public securities available for purchase from direct treasury on Tuesday morning (7):

ICMS and salary adjustment

On the political front, investors are echoing President Jair Bolsonaro (PL)’s announcement yesterday. Measures to reduce fuel prices will now be directed at Form of the proposed amendment to the Constitution (PEC) A legislative proposal with more complex handling in Parliament.

These were the motions put forward today to the presidents of both houses, and you will bring them to the House and Senate. He said that if there is an understanding on the part of senators on passing the supplementary bill and in passing an amendment to the Constitution very quickly, that will take effect immediately at the end of the line for consumers.

Equipped as the Provisional Elections Committees, the measures will need the approval of 3/5 of the House of Representatives (ie 308 out of 513 members) and a similar quorum among the Senate (49 of 81), in two rounds of voting in each legislative session. a house. Only then can it be issued by the National Congress. Parliamentarians can amend the text without the possibility of a presidential veto.

Practically speaking, the proposal should pave the way in current fiscal rules to allow the resources needed for such compensation to be outside the spending ceiling – a rule that limits a large portion of public spending from being pushed into inflation.

In addition to fuel, another topic that remains on the agenda is readjustment to the civil service. However, President of the National Permanent Forum on Model Government Jobs (Fonacate), Rodini Márquez, stated that the Jair Bolsonaro (PL) government’s decision to “push” the definition of readjustment of federal employees indicates that The executive branch has already decided not to promote civil servants this year.

The Ministry of Economy informed yesterday (6) that it will use the reserve of 1.7 billion Rls in the budget allocated for the readjustment to reduce the size of the emergency needed to meet the spending ceiling this year (the government needs to freeze R$8702 billion, but with the use of the reserve, the effective mass reached 6.965 billion Brazilian reals).

China and Australia, commodities

On the outside arena, Asia Pacific markets closed mixed after the Reserve Bank of Australia announced a higher-than-expected interest rate decision.

This Tuesday (7), the Reserve Bank of Australia unexpectedly announced a 50 basis point increase in its policy rate to 0.85%. Analysts had expected an interest rate increase of 25 basis points, or 40 basis points, according to Reuters.

The previous day (6), Chinese markets rebounded with the easing of regulatory strictures in China and signs in parts of the country of a return to more normal activity after the largest Covid-19 outbreak in the country in two years.

Merchandise also stands out. Oil prices are rising on expectations of higher demand in China, with the easing of stringent Covid-19 restrictions, and uncertainty about how much of the higher production target will help circumvent a supply shortage.

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