Dollar begins week higher against Brazilian real (R$)

RIO DE JANEIRO, BRAZIL – At around 10:20 AM, the commercial dollar was up 0.60% against the Brazilian Real, quoted at R$5.4008 in the spot exchange market, with the Brazilian currency aligned with its emerging peers.

In interest rate futures, the One-day Interbank Deposit (DI) contract for January 2022 rose from 7.21% in the previous adjustment to 7.22%, while the DI for January 2023 rose from 9.135% to 9.155%.

In longer maturities, the DI interest for January 2025 varied from 10.165% to 10.17% and the DI interest for January 2027 dropped from 10.55% to 10.53%. In the United States, the yield on the 10-year U.S. Treasury bond increases again to close to 1.5%, at 1.479%, from 1.463% in the last session.

Local assets begin with an eye on external caution in a busy week, waiting for the release of the Extended Consumer Price Index (IPCA) in Brazil and the September payrolls report in the U.S.. Domestically, industrial production and retail sales figures for August will also be released.

“The yield curve may show few relevant changes on Monday, in a day relatively empty of indicators and market data, with investors waiting for major asset drivers throughout the week, such as activity data and IPCA in Brazil and labor market numbers in the U.S.,” says Renascença DTVM.

Overall, global agents are keeping as a background the prospect of more persistent inflation ahead, while incorporating into their scenarios projections of a more modest global growth.

In the very short term, the pending extension of the U.S. debt ceiling, which refers to the volume of funds that U.S. legislators authorize the Treasury Department to borrow, continues to weigh on investors’ mood. The debt ceiling must be either raised or suspended by October 18.

In addition, uncertainty about the future of highly indebted Chinese real estate development giant Evergrande remains on the radar. Today on the Hong Kong Stock Exchange, trading in shares of China Evergrande Group and its property services subsidiary Evergrande Property Services was suspended.

The company’s property management unit, valued at US$7 billion, may be the subject of a takeover bid. Investors are on the lookout for a potential transaction involving the purchase of shares in Evergrande’s subsidiary by another real estate company, Hopson Development Holdings. Hopson said today that its shares had been suspended due to the announcement of a transaction involving a Hong Kong-listed company.

While concern persists among agents with the advance of a global energy crisis, which reinforces inflationary risks in several economies, even advanced ones, despite the slowdown in growth, investors are also waiting for a meeting of the Organization of Petroleum Exporting Countries (OPEC) and allies, which may result in the announcement of an increase in the production of the commodity. Brent oil prices were slightly up, close to US$80 per barrel.

On the local agenda, the highlight will be Central Bank President Roberto Campos Neto’s appearance on “Live do Valor” at 4:30 PM, after the monetary authority signaled that it will seek a “significantly contractionary” interest rate in light of a negative inflationary trend that adds to the challenge of anchoring the IPCA to the 2022 and 2023 targets. Campos Neto also spoke at 10 AM at a meeting of the São Paulo Commercial Association.