BRASILIA (Reuters) – Brazil’s federal public debt declined in January, marked by softer signals on U.S. trade policy under President Donald Trump that boosted emerging markets, pushing local interest rates futures lower and flattening the yield curve.
The country’s public debt fell 0.87% from the previous month to 7.253 trillion reais ($1.26 trillion), Treasury data showed on Wednesday, driven by net redemptions of 109.76 billion reais and interest payments totaling 46.37 billion reais.
According to the Treasury, domestic debt issuance rates trended lower, correcting after a sharp spike in December, when markets were rattled by Trump’s potential policies and local fiscal concerns following a government fiscal package that disappointed investors.
Still, the average cost of domestic bond issuance over 12 months rose to 11.36% from 11.04% in December.
The rise followed the central bank’s tightening cycle, which saw a 100 basis-point rate hike at the end of January, bringing interest rates to 13.25%.
Policymakers have already signaled another increase of the same magnitude at their upcoming policy meeting in March as inflationary pressures persist, fueled by a tight labor market and strong economic activity.
($1 = 5.7715 reais)
(Reporting by Marcela Ayres; Editing by Alistair Bell)
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