Brazil May IPCA Hits 0.58%, Pushing JAN27 DI Yields Up 15 Basis Points
Updated
Updated · vtmarkets.com · Jun 12
Brazil May IPCA Hits 0.58%, Pushing JAN27 DI Yields Up 15 Basis Points
3 articles · Updated · vtmarkets.com · Jun 12
Summary
JAN27 DI yields jumped 15 basis points to 9.85% after Brazil’s May IPCA rose 0.58%, above the 0.53% consensus and stronger than markets had priced.
That upside surprise is prompting investors to question a July COPOM rate cut, with nearly 40 basis points of easing previously expected by year-end now being priced out.
USD/BRL could retest 5.50 and the Ibovespa—already down 3% this quarter—faces added pressure as higher borrowing costs threaten earnings and lift risk premiums.
Annual inflation had already accelerated to 4.72% in May from 4.39%, above the central bank’s target band, giving hawkish policymakers more leverage after the last 5-4 split vote.