Brazil’s 10-year government bond yield climbed to 14.52%, up from the three-week low of 14.42% reached on August 4th, after Copom signaled a cautious stance toward additional interest rate cuts. The BCB reduced the Selic rate by the widely anticipated 25 basis points to 14.0%—its lowest level since March 2025—but emphasized that the speed and magnitude of further easing will depend on incoming economic data and the inflation outlook. The committee also pointed to increased uncertainty stemming from conflicts in the Middle East and from the monetary policy outlook in advanced economies.
On the domestic front, Brazil created a net 145,161 formal jobs in June, far exceeding expectations of 115,000. This robust labor market performance supports the view that monetary policy will remain restrictive for longer. At the same time, fiscal concerns persisted, amid signs of higher government spending and pressures on revenues linked to new US tariffs.
