April 5th, 2024


1. Long-term real interest rates reach 6%, the highest rate since October

Economic uncertainties – caused by the instability of public accounts and the increase in long-term interest rates in the United States – have led the financial market to increase its assessment of risk. The long-term real interest rate, which corresponds to investors’ expectations for the future, is reaching 6%, its highest level since October 2023.

Real market interests, derived from inflation-indexed bonds (NTN-Bs) maturing in August 2050, recently increased from 5.47% at the beginning of the year to 5.93%. This growth affected the auction of public National Treasury bonds, as seen in the last auction, when 150,000 NTN-Bs maturing in 2060 were sold at a rate of 5.9493%, the highest in the year. This growth tendency is similar to what is seen with nominal interest rates, currently reaching nearly 11%. This increase is caused partly by the increase in the rates of the United States, where 10-year real interest rates have gone from 1.74% to 2% since the beginning of the year. This suggests the importance of having global rates reassessed.

Valor: Juro real de longo prazo chega perto de 6%, maior nível desde outubro

2. Instant payments: Central banks of seven countries will test token technology

The Bank for International Settlements (BIS) will lead a project involving seven central banks (including New York’s Federal Reserve Bank) to test a new transaction registration system, which could lead to a global instant payment system similar to Pix in Brazil. The proposed system will use tokens, a digital register that ensures the authenticity and integrity of transacted amounts. The central banks, alongside private companies, plan to test the combined use of local currencies and deposits in banks, which would then be registered in a unified international ledger.

The Federal Reserve Bank and the central banks of Japan, South Korea, Mexico, Switzerland, England, and France – representing the central banks of the Euro zone – are all part of the initiative, named Project Agora. The goal is to overcome the existing challenges for international payments, caused by legal, regulatory, technical, and time differences. Tokens provide advantages for combining instant messaging functionalities with payment and transactions liquidation mechanisms, aiming to make international payments more efficient and accessible.

O Globo: ‘Pix global’: sete bancos centrais farão teste com token para pagamentos instantâneos

3. Investments in electric vehicles and green hydrogen: potentially R$ 2.2 trillion in renewable energy in Brazil

As the use of electric cars and the production of hydrogen increase in Brazil, it is believed the demand for energy will require R$ 2.2 trillion in investments by 2050. According to a study by Portal Solar, a company specialized in solar power projects, this amount will be used to install nearly 540 gigawatts (GW) of renewable sources of energy.

According to the study, the transition to electric vehicles will result in extra demand for 403 terawatt hours per year (TWh/year), which represents nearly the total energy production capacity of the National Interconnected System (SIN). This will require an additional 270 GW of installed capacity. Furthermore, the demand for energy is expected to grow due to the increase in the Gross Domestic Product, the energy transition of sectors like manufacturing, and the production of green hydrogen.

The solar power market grew significantly in Brazil in the last few years, going from 8 megawatts (MW) to 32,000 MW of installed capacity, making it the second largest source of energy in the country, behind hydroelectric.

Estadão: Veículos elétricos e hidrogênio verde devem atrair R$ 2,2 trilhões ao País para energia renovável

4. GDP: Market increases expectations for 2024 for the seventh consecutive week

Market analysts questioned by the Central Bank in Boletim Focus maintained their expectations for the Selic rate at the end of 2024. This is the 14th consecutive time they have made this prediction. The average projection for the GDP also increased for the 7th consecutive time, reaching 1.89%, a 0.04 percentage point increase compared to the previous week. The Extended Consumer Price Index (IPCA) for 2024 remained at 3.75% and the announcement of estimates was postponed.

The projection for the Selic rate, the basic interest rate, remained at 9% for the 14th consecutive time, with expectations for 2025 and 2026 kept at 8.50%. Expectations for dollar exchange rates were kept at R$ 4.95 until the end of 2024 and R$ 5.00 until the end of 2025.

Exame: Boletim Focus: mercado eleva projeção do PIB de 2024 pela 7ª semana consecutiva, para 1,89%

5. Surplus for the Brazilian balance of trade doubles in January and February

The surplus for the Brazilian balance of trade doubled in January and February, with exports exceeding imports by US$ 7.77 billion, compared to the US$ 3.13 billion in the same period of 2023. This increase is due to the growth of exports, which amounted to US$ 51.1 billion this year versus US$ 44.3 billion in 2023. Imports have also registered an increase, going from US$ 41.17 billion to US$ 43.37 billion in the first two months of 2024, according to the Brazilian Central Bank.

The Ministry of Development, Industry, Trade, and Services had already reported a record surplus for the balance of trade in January and February, reaching US$ 11.94 billion. The Central Bank also assesses other metrics, such as the purchase of electricity and international postal shipping, as part of the country’s current transactions, which are also part of the services balance and the primary income account. 

O Globo: Saldo positivo da balança comercial dobra nos dois primeiros meses do ano