11.12.202518:01:09UTC+00Brazil 10-Year Bond Yield Halts Surge

The yield on Brazil's 10-year government bond dropped below 13.74%, as political tensions eased and both domestic and external factors became more predictable, resulting in a reduced risk premium demanded by investors for holding long-term Brazilian bonds. The Central Bank of Brazil, known as Copom, maintained the Selic rate at 15% in December, and its firm, data-driven stance indicated the rate would remain high for an extended period. This stance demonstrated the bank's readiness to intervene if necessary, thereby mitigating extreme fiscal risks. Even as November's inflation cooled to around 4.46% and discussions of potential rate cuts began to surface, fears of more severe political turmoil diminished, alleviating a primary cause of the prior market selloff. Additionally, a decrease in global yields occurred after the Federal Reserve's widely expected 25 basis point rate cut and its decision to purchase approximately $40 billion in short-term Treasuries, which pushed the U.S. 10-year yields down to the low 4s and caused a weakening of the dollar.