FX.co ★ Brazil 10-Year Government Bond Yield at 13.83percent

Brazil's 10-year government bond yield has eased to approximately 13.8%, marking its lowest point this year. This movement is influenced by enhancing fiscal metrics, increased investments into emerging-market debt, and changing monetary expectations. Treasury data reveals that the primary deficit for May has narrowed to R$40.6 billion, significantly under anticipated levels. This improvement has pushed the 12-month rolling balance into a modest surplus, aligning it within the official target range and mitigating concerns regarding debt sustainability. Furthermore, the Central Bank of Brazil's decision to raise the Selic rate to 15%, alongside indications from meeting minutes that rates will remain at restrictive levels for a "very prolonged period" to ensure inflation convergence, has strengthened confidence in Brazil's disinflation trajectory, thereby encouraging purchases of long-term bonds. Concurrently, growing expectations of rate cuts by the Federal Reserve have motivated foreign investors seeking higher yields to channel funds into high-yield bonds. According to JPMorgan, the spreads on emerging market sovereign bonds and returns on local debt are currently at their tightest and highest levels since 2022.