The economy’s basic interest rate, the Selic, remains high, at 13.75% per year. But another important measure for defining the cost of consumer credit and the income for investors is falling. It’s the future interest.
If for those who want to take credit the news of the fall sounds encouraging, the change in trend requires more care from the fixed income investor in choosing the investment.
Experts guarantee, however, that the time is ideal to seek profits without giving up security. The recipe is to diversify the bonds according to the movement of the yield curve. Don’t know what this is? It’s less complicated than it looks.
First, it is important to understand what future interest is.
On the B3 (Brazilian Stock Exchange), the so-called futures contracts are traded as a commitment to buy or sell a given financial asset within a previously defined period.
The interest on these operations takes as a reference the loan rate maturing in a day that the banks carry out among themselves for the daily cash settlement. Financial institutions are required to start the day with a positive balance and, therefore, carry out these transactions.
Such operations are carried out through the issuance of CDIs (Interbank Deposit Certificates). This is where the name DI rate comes from.
Interest on futures contracts is based on the DI rate, but also fluctuates according to the term and the market’s perception of the risk of not receiving the amount borrowed over time.
When someone talks about yield curve futures, therefore, they are probably referring to the DI rate. This is the main reference for the Brazilian credit market.
The yield curve is the graphical representation that shows, day after day, the average rate negotiated for futures contracts. For each maturity period there is a curve. See the graphic below:
The decline in yield curves began at the end of last month, after four months of rising, and is more pronounced in medium-term contracts, maturing between 2025 and 2030.
This information is important because it is from the trend of the short and medium term curves that the investor will define the best strategy.
Although the DI rate has a different calculation and function than the Selic, it tends to follow the value of the basic rate of the economy.
One of the reasons for this is that the operations carried out daily between banks can also be backed (guarantee) in public securities, whose interest corresponds to the Selic variation.
Do you already understand interest? See the investment strategy
Investment in fixed income becomes advantageous when it achieves the highest possible real interest, which is the difference between inflation and the contracted interest (nominal) in the period in which the money was invested.
From the beginning of April to the second half of July, the average DIs curves rose from around 11% to approximately 13.5% per year. But in the last three weeks they have converged to values ​​between 11.7% and 12%.
The still high rates reflect the expectation that the Central Bank will keep the Selic high for some time to guarantee the drop in inflation.
It should be noted that, although official inflation is at 10.07% in 12 months, the market projects a drop to 5.5% per year in 2023.
This means a high real interest rate perspective. This favors fixed-rate investments, that is, with a previously defined rate based on current high interest rates. But care is needed.
If for the short term the interest rate advantage is taken for granted, it is necessary to consider unforeseen events that could provoke a new escalation of inflation.
Post-fixed securities are indicated to mitigate this risk for medium-term investments (from 2025 onwards) because they guarantee the payment of accumulated inflation at the time of redemption.
“Investors sometimes bet only on the expectation of high interest rates, but are left unprotected in the event of a new inflationary shock”, warns Camila Abdelmalack, chief economist at Veedha Investimentos. “Here in Brazil it is very complicated to bet against inflation.”
The explanation is made easier by taking some practical examples. The Tesouro Direto program has a product called Treasury Prefixed 2025. The interest paid for redemption at maturity is 11.85% per year.
By making this choice, the investor is betting that this rate will not be surpassed by inflation until 2025. This is a consistent outlook, as the projections indicate a decline in consumer prices in the short term.
The same platform as the National Treasury offers the floating-rate Treasury IPCA+ 2026 bond. It combines a fixed yield of 5.5% per year with the variation of official inflation, measured by the IPCA (Extended Consumer Price Index), for settlement in August 2026. It is the guarantee of medium-term profitability with protection against an inflationary shock.
Here in Brazil it is very difficult to bet against inflation
Anyone with a CPF and a bank account can invest through Treasury Direct, even starting with low amounts. The two titles mentioned require a minimum investment of just over R$30.
Access is through authorized banks and brokerages. The official website treasuredireto.com.br has a list of institutions, simulator and details about available applications.
The concept of fixed income diversification does not apply exclusively to National Treasury products. The private market has securities linked to DI and Selic rates, to the IPCA and which combine options to seek profitability in different types of scenarios.
“For applications until 2025, what we have recommended is the prefixed one, as we have rates [de juros] relatively high, speaking of bank securities, such as CDBs [Certificados de Depósitos Bancários]LCIs and LCAs [Letras de Crédito Imobiliário e do Agronegócio]”, comments Victor Zucchi, fixed income specialist at Valor Investimentos.
“For up to three years, it’s great to have an investment like that, like a CDB paying 15% [de juros ao ano] approximately”, he says. “Above that, I find an NTN-B more interesting.”
NTN-B is what the market calls the inflation-linked Treasury Direct bond. It is the aforementioned IPCA+ Treasury.
For up to three years, it’s great to have an investment like that, like a CDB paying 15% a year
For the proposal to profit even with the decline in the yield curve to work, however, it is important to respect the deadlines established for the settlement of the bond, according to Zucchi.
Early redemptions are called mark-to-market. This means that the investor who withdraws before maturity loses the contracted yield and is obliged to accept what the market is paying for the security at the time of withdrawal.
Not having to change the investment is the best way to escape this loss. That is why the basis of an investment plan must start with an emergency reserve made up of one or more applications that can be redeemed quickly and without loss of income. It’s called daily liquidity.
CDBs and Selic Treasury are usually the most recommended for this situation due to their predictability. They pay income calculated on the prevailing interest.
Sloping interest curves also arouse interest in the equity market and the moment is still considered favorable for this, according to Camila Abdelmalack, from Veedha
Despite the strong appreciation in recent days, with the Stock Exchange having passed 112 thousand points in its best week since November 2020, the economist considers that there are opportunities to enter shares considered discounted.
Investing in the stock market is best suited for people with a long-term view, willing to withstand periods of volatility. But that doesn’t make it any less a possibility for alternating investments.
“The secret of a successful portfolio or one that does not bring displeasure is diversification”, he says.
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