The one-day interbank deposit futures rates (DI rates) in Brazil are trading lower Monday, with shorter maturities' investors reacting to domestic economic data released earlier, while longer maturities are influenced by the U.S. dollar.
"The inflation figures are fine. I think the market is seeing that there should not be a rise in short-term interest, which impacts the shorter DIs. But at the same time, investors have an eye here and an eye in the U.S. dollar, which is rising," said Leme Investimentos partner and fixed income manager, Paulo Petrassi.
Getelio Vargas Foundation's General Price Index-10 (IGP-10) rose 0.93% in July, slowing down from the 1.86% rise recorded in June, while the Weekly Consumer Price Index (IPC-S) lost strength and rose 0.67% in the second reading of July, from 1.01%. Meanwhile, the Brazilian Central Bank's Economic Activity Index (IBC-Br) fell 3.34%, more than the 3.10% drop forecast by the market.
Despite the more benign inflation scenario, the U.S. dollar may put pressure on the DIs, especially the longer maturities, reflecting some caution regarding the domestic political scene.
Rafael Passos, an analyst at Guide Investimentos, said that the day is more negative for the global stock markets and that interest rates on U.S. Treasuries have some upward pressure despite a meeting between the Presidents of the United States and Russia, Donald Trump and Vladimir Putin, have not been negative.
Near the end of the session, the January 2019 DI contract rate was at 6.785%, from 6.82% in the previous settlement, while the January 2020 DI rate was at 8.19%, from 8.20%. The January 2021 DI contract rate was at 9.18, from 9.21%.