Brazil 10-Year Bond Yield Holds Around 13.5%

The yield on Brazil’s 10-year government bond stabilized near 13.5% as investors balanced a high Selic rate against a fresh inflation spike. Mid-month inflation jumped 0.8% in February, which was significantly higher than the expected 0.6% and driven by rising education and transport costs. This surprise has complicated the path for the Central Bank of Brazil, which held its policy rate at 15.0% in January but had signaled a potential cut for March 18. While a record 2025 tax revenue of R$2.89 trillion and a $4.34 billion trade surplus in January provide a fiscal cushion, the resilient labor market and sticky price pressures have caused traders to dial back bets on aggressive easing. Brazilian yields also remain sensitive to global trade volatility and the shift in US Treasury yields below 4.0%. However, the high real yield differential continues to attract foreign capital as the market waits to see if the central bank will prioritize its inflation target over growth concerns.