FX.co ★ Brazil 10-Year Yield Falls Toward 14% on Cooling Inflation

Brazil's 10-year bond yield has decreased, approaching 14% from a recent four-week peak of 4.3% recorded on May 23rd. This shift is credited to a more favorable inflation outlook and the influence of rising bond prices worldwide. Recent data indicated that the IPCA-15 mid-month inflation measure was below predictions, aligning with the anticipation that the central bank is unlikely to implement further rate hikes in the ongoing cycle. Simultaneously, the Brazilian real gained strength following the central bank's intervention via a dollar auction, which helped moderate inflation expectations. On a global scale, U.S. Treasury yields fell as Japan announced plans to reduce bond issuance, thereby diminishing global supply and bolstering bond prices. Nonetheless, investor apprehension persisted somewhat after the partial rollback of the Financial Transactions Tax increase.