FX.co ★ Brazil 10-Year Bond Yield Rebounds from 2-Month Lows

The yield on Brazil's 10-year government bonds has climbed to over 13.6%, rebounding from a low of 13.55% on September 17th. This shift came as investors evaluated the recent decision and future guidance from Brazil's central bank, alongside the rise in US Treasury yields that influenced global long-term rate benchmarks. The Brazilian Central Bank (BCB) maintained its key interest rate at 15%, indicating it plans to hold this rate for some time due to persistent inflation, which hovers around 5.1%, despite a downturn in economic activity. This is reflected in the IBC-Br index, which fell by 0.5% in July, and an unemployment rate of approximately 5.6% for the moving quarter ending in July. The current tight labor market reduces any urgency for the Copom to quickly lower rates. In the United States, 10-year Treasury yields increased following the Federal Reserve's recent decision and revised forecasts. While the Fed reduced the federal funds rate by 25 basis points and suggested additional easing later in the year, its updates to growth and inflation projections dampened expectations for a rapid easing cycle, contributing to higher US long-term yields.