FX.co ★ Brazil 10-Year Yield Eases After Copom Minutes

Brazil’s 10-year government bond yield slipped to 14.4% in late June after the release of the minutes from the latest Copom meeting, where the benchmark Selic rate was cut by 25 basis points to 14.25% per year. The indication that Copom left room for additional Selic cuts contributed to a flattening of the Brazilian yield curve. However, the minutes adopted a somewhat more hawkish tone than the initial statement, explicitly characterizing the balance of inflation risks as asymmetric and skewed to the upside. At the same time, the US Federal Reserve took a more hawkish stance at its latest meeting, with policymakers signaling further rate hikes by December. This shift prompted investors to dial back expectations for monetary easing, thereby limiting the decline in bond yields.