Lower-than-Expected IPCA Fails to Lower Public Bond Yields

The National Consumer Price Index for October rose by 0.14%. This result surpassed the most optimistic market estimates. Despite the positive surprise, the Tesouro Direto platform did not see a decline in public bond yields. The fixed-rate bond maturing in 2032 reached 15.13% per year while the 2029 paper rose to 14.65%.

This cautious environment is driven by distrust regarding the management of Brazilian public accounts. The debt trajectory and expectations surrounding the vote on a fiscal adjustment package in the Senate prevent the inflation relief from translating into lower interest rates. The market assesses that the proposed measures still lack the strength to ensure the sustainability of the fiscal anchor.

Data from the IBGE shows that accumulated inflation over the last twelve months reached 4.63%. This level exceeds the upper limit of the target set by the National Monetary Council which is 4.5%. The persistence of prices above the ceiling reinforces the defensive stance of investors regarding monetary policy.

Beyond fiscal issues, the strengthening of the dollar and rising U.S. Treasury yields are pressuring local assets. The food and beverage group recorded a significant increase of 1.04% for the month. This keeps the alert active regarding cost pressures. Experts point to the fact that a single favorable monthly reading does not change the structural price dynamics in the country.

The market awaits the vote on Supplementary Bill 299/2026 to understand the real impact on public spending. The Senate President estimated that the adjustment could reach approximately 60 billion reais. The ability of these rules to contain spending growth will be a determining factor for the future behavior of the yield curve.