The yield on Brazil’s 10-year government bond fell below 14.1% after the National Treasury launched record liquidity operations to stem a sharp selloff sparked by energy shocks in the Middle East. Yields had previously spiked above 14.3% following a 25 basis point cut in the Selic rate, to 14.75% on March 18, but the domestic curve later stabilized as authorities conducted R$49.1 billion in buybacks, creating an exit window for investors.
This tactical intervention coincided with a moderation in energy prices, as markets responded to diplomatic signals about a possible reopening of the Strait of Hormuz. Even so, sentiment remains fragile, with investors wary of a thinning liquidity buffer and the Copom’s decision to withdraw forward guidance amid ongoing inflation uncertainty. Market participants are now weighing the short‑term relief provided by the Treasury against mounting long‑term fiscal pressures, including R$61 billion in mandatory parliamentary amendments.
