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Treasury direct bonds fell 9.5% in August due to political and fiscal risks | Straight treasure

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Treasury direct bonds fell 9.5% in August due to political and fiscal risks |  Straight treasure

month Augustlike what happened in July, it was another loss period for most Treasury Direct bondsthat follow the same problems. Investor perception of the country more serious financial problems and inflationary pressures acquires more and more clear contours and even received extra caution associated with political uproar.

Luis Cesta, Analytical Officer at Fintech Monett, explains that the beginning of the month was negatively impacted by global problems with economic consequences delta variant of the novel coronaviruswhich is easier to convey, but the cloudy situation on the domestic market soon caught the attention of investors and further reduced the yield on these bonds in August.

“Concerns about COVID-19 persist, but during August the problem was predominantly internal, with political, economic and financial issues,” he says. The shopping cart emphasizes that any indications of “a certain lack of discretion and financial responsibility are severely hampering the market“.

Installment payment discussions preliminary, increase in value Auxílio Brasil (new name of the Bolsa Família program) this is new gas stations, which includes the forgiveness of up to 90% of corporate debts, influenced the investor’s mood… Added to this ideological clashes between President Jair Bolsonaro and STF (Supreme Court), who called investors’ warnings about possible institutional crisis

In this scenario of fears and uncertainties, bond prices tend to be lower, while the rate offered in exchange for investment is higher. In practice, investors trade more because of the price of the paper and demand a higher interest rate in exchange for the risk associated with government bonds.

Among the securities available for investment to small investors, only securities related to Selic ended the month positively with gains of 0.47% and 0.20% on maturities in 2024 and 2027., in that order. But only the 2024 Selic Treasury performed above 0.24% of the savings return in August.

Check out the performance of this month’s games

* Securities that do not have accumulated returns for a year or 12 months are available for a shorter time and therefore there is no yield calculation.

A brand to market can bring great volatility to investments in Tesouro Direto, increasing their potential profitability or even making up for losses, as happened in August with inflation-linked bonds with fixed interest rates

But it’s worth remembering that this fluctuation only affects investors who buy back their investments before the expiration date “agreed” with the government.… If you bring the bond to maturity, a “government-agreed” yield is guaranteed at the time of purchase.

READ ALSO: Growing interest: is it better to invest alone in fixed income or in funds?

What to expect in September?

the same fears which followed the financial market and damaged the market value of government bonds starting fromremains in the spotlight of investors in September… “The meeting of political and economic news should continue. bringing volatility, especially from fixed rates– says Basket.

Also yesterday, the government sent a budget proposal for 2022 to Congress, along with Brazilian Auxilio. However, the amount of resources allocated for the social program is the same as in 2021 and amounts to 34.7 billion reais. Bolsonaro intends to increase the grant, but the adjustment still requires congressional approval.

Political uproar and clashes between powers will take on a new chapter on September 7 when demonstrations in support of Bolsonaro are scheduled. Yesterday, in another call to action, Bolsonaro said that “he will change the fate of Brazil within the four lines of the Constitution, he will not raise his sword and utter a few words.”

In response to the specter of inflation, the Ministry of Mines and Energy and Aneel (National Electricity Agency) announced the creation of a new tariff flag called “Water scarcity” at R $ 14.20 for every 100 kWh consumed. The additional amount will be charged from September 1 to April 30, 2022. The fee represents an increase of 50% over the R $ 9.49 set for the second level of the red flag. And this is the second adjustment since June, when the most expensive banner was reconfigured by 52%.

“With each passing week, Focus Bulletin shows a deterioration in the scenario expected by the market,” Cesta emphasizes. The latest survey of market institutions by the Central Bank shows that the expectation of official inflation in Brazil, as measured by the IPCA, rose from 7.11% to 7.27% this year, the 21st consecutive high. For 2022, the forecast has been increased from 3.93% to 3.95% in the sixth upward revision in a row.

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With the new “Water shortage” banner, these more negative forecasts should increase significantly… Second André Braz, Price Index Coordinator, Brazilian Institute of Economics, Fundação Getulio Vargas (FGV Ibre)The new surcharge means that the electricity bill will, on average, be 7.35% more expensive. Thereby, IPCA should close the year at 8.2%

Due to the fact that the turmoil has not escaped the market for interest rates and government bonds, Basket prefers inflation-linked bonds with a shorter maturity… O Tesouro HICP + the term available to small investors today, expiration date 2026… It could be purchased yesterday for a minimum amount of BRL 58.50, with IPCA return for the period plus a flat rate of 4.41%.

“One thing is for sure: since you are a Brazilian investor, remember that In Brazil, inflation always surprises itself from time to time, and so it is ideal to always have a portion of the portfolio protected from this impact.“, write down XP Investimentos Fixed Income Analysts Camilla Dolle, Francisco Lobo and Rodrigo Sgavioli, in the report.

According to them,to protect your investment from inflation, bonds linked to IPCA + are generally more recommended than, for example, post-fixed rates, which pay a percentage of the CDI), or fixed rates.

“The reason is that, despite the forecasts of economists, there is no absolute certainty about what the base interest rate (Selic) or IPCA will be in the future, since the scenario can always change over time,” they say.

Given the uncertain economic scenario and all financial problems, interest paid on IPCA + bonds increased “accordingly compared to the beginning of the year, which is an opportunity”, according to XP analysts.

Treasury Direct fell 9.5% in August due to political and fiscal risks – Photo: Getty Images

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