Foreign Investors Dump Brazilian Assets, Pushing Jan 2031 DI to 14.80% as Election Stress Spreads
Updated
Updated · Valor International · Aug 17
Foreign Investors Dump Brazilian Assets, Pushing Jan 2031 DI to 14.80% as Election Stress Spreads
3 articles · Updated · Valor International · Aug 17
Summary
Brazil’s market selloff spread into fixed income on Aug. 14, sharply steepening the futures curve as the January 2031 DI rate jumped to 14.80% intraday from 14.515%.
Foreign outflows were seen as the main driver, with investors cutting Brazil exposure amid election uncertainty, unclear fiscal prospects and a broader shift toward selectivity as global liquidity tightens.
The pressure had been building all week: the same Jan. 2031 DI contract rose as much as 50 basis points from 14.275% over five sessions, even though bonds had lagged earlier weakness in the real and Ibovespa.
Citi said the curve may keep steepening through the first round of the presidential election before flattening after a possible runoff, while short-end moves still hinge on the central bank’s expected 0.25-point Selic cut in September.
Inter Asset’s Ian Lima said the steepening trend has been in place since June and now looks harder to extend much further, though he also sees no clear catalyst yet for a sustained flattening.