Brazilian DI futures closed lower on Tuesday as market participants scaled back their pricing of future rate hikes.
The move followed the release of the latest minutes from the Central Bank of Brazil's Monetary Policy Committee (Copom), which indicated a consensus for maintaining the current stance, alongside a broader decline in US Treasury yields that supported risk assets globally.
5% threshold, a move attributed to a repricing of geopolitical risk following a ceasefire agreement between the United States and Iran.
The drop in DI rates reflects a reduction in the term premium embedded in Brazil's yield curve.
With the Copom minutes failing to signal any imminent hawkish shift, traders adjusted their expectations for the Selic rate path, effectively lowering the cost of borrowing in the forward market.
This adjustment aligns with a broader trend of easing financial conditions in emerging markets, driven by the simultaneous pullback in US benchmark yields.
The US 10-year Treasury yield had previously dropped below the 4.5% threshold, a move attributed to a repricing of geopolitical risk following a ceasefire agreement between the United States and Iran.