FX.co ★ Brazil 10-Year Bond Yield Moves Higher

Brazil’s 10-year government bond yield climbed above 14.75% in late July, up from 14.54% earlier in the month, driven by expectations of higher interest rates and increased government bond issuance. On the wholesale market, prices for oil, natural gas, soybeans, and electricity rose as renewed clashes between Iran and the United States dampened hopes for a resumption of Middle Eastern energy supplies. These developments reinforced the view that inflation pressures could re‑emerge and prevent the Brazilian central bank from cutting interest rates in the coming quarters, pushing domestic yields higher. At the same time, indications of higher deficit spending by the federal government further weighed on Brazil’s fiscal outlook. The latest figures showed the nominal budget deficit widening more than expected, to BRL 164 billion, while government revenues were constrained by new U.S. tariffs.