2025.08.1320:40:06UTC+00Brazil 10-Year Bond Yield Rebounds From 1-Month Low

The yield on Brazil's 10-year government bonds has risen to approximately 13.8%, bouncing back from a one-month low of 13.7% recorded on August 12th. This change comes as markets adjust to fiscal risks associated with the recent US tariff shock and Brazil's policy measures in response. President Lula's "Sovereign Brazil" initiative, which involves an estimated R$30–35 billion in credit via the Export Guarantee Fund, along with expanded Reintegra refunds, tax deferrals, and strategic government purchases, is designed to mitigate export losses. However, this plan does entail immediate fiscal costs and potential liabilities. Concurrently, the Central Bank's strategy to maintain the Selic rate at 15% results in high policy rates, restricting the possibility for quick rate cuts and stabilizing expectations for real interest rates. Meanwhile, ongoing inflation and a high public debt ratio continue to exert upward pressure on long-term yields.