12.11.202620:28:46UTC+00Brazil 10-Year Yield Rises as Fiscal Adjustment Bill Disappoints

The yield on Brazil’s 10-year government bond climbed to around 15.37%, staying close to the ten-year peak of 15.75% reached on November 3, after the government’s fiscal adjustment proposal disappointed investors. Initial market reaction to the fiscal package had been positive, as it was seen as a first step toward a more robust fiscal framework. However, sentiment has shifted, and the bill is now viewed as a modest and insufficient adjustment.

Analysts note that the measures do not prioritize structural reforms capable of reversing the upward trajectory of public debt. Instead, they largely expand the scope for expenditure freezes in an effort to meet the government’s primary surplus target of 0.5% of GDP by 2027.

On the inflation front, annual consumer price growth accelerated to 4.63% in October from 4.58% in September, below market expectations of 4.74% but still a four‑month high and above the Central Bank of Brazil’s 4.5% target ceiling. With inflation running above target, the BCB is expected to maintain a cautious stance and delay any resumption of its Selic rate‑cutting cycle.