Brazilian DI futures fall across the curve

Brazilian interest rate futures settled lower across the term structure on 18 September 2026, reversing early-session increases linked to fiscal worries after an announced 15% increase in Bolsa Família benefits. The curve shifted into negative territory in the afternoon as market participants priced in electoral shifts and receiving flows pushed rates down along all maturities.

At the close of trading, the January 2027 DI contract was stable at 13.555% compared to the prior settlement. The January 2029 DI eased slightly to 13.840% from 13.845%, while the January 2031 DI dropped from 14.061% to 14.020%.

A Datafolha poll released on 17 September 2026 showed a technical tie between President Luiz Inácio Lula da Silva and Senator Flávio Bolsonaro, with the incumbent numerically ahead. While the survey initially drew a neutral reaction, traders saw relief later as investors priced the prospect of an opposition victory. Fiscal tension also eased after the public prosecutor's office at the Federal Court of Accounts (MPTCU) requested the suspension of the 15% Bolsa Família hike, citing potential breaches of the Fiscal Responsibility Law.

Gustavo Cruz, chief strategist at Sincra, noted that the curve defied global upward pressures from US rate hikes due to the domestic political picture, supreme court events, and the benefit increase. Iván Riveros, Latin American foreign exchange and rates strategist at Citi, noted that local assets are likely to remain guided primarily by political developments ahead of 2027.

The retreat in local rates diverged from global yields. Following a 0.25 percentage point rate increase by the US Federal Reserve on 16 September 2026 and a policy rate hike by the Bank of Japan to 1.25%, US Treasury yields climbed. The two-year US Treasury note rose from 4.683% to 4.743%, while the 10-year yield advanced from 4.937% to 4.993%.