Brazil’s benchmark Selic interest rate remains at 13.75% a year after the central bank’s Monetary Policy Committee (Copom) paused its rate-cutting cycle. The decision keeps post-fixed-income investments—whose returns track the Selic or the CDI, a private-market reference rate—attractive, analysts told Folha.
Inflation-linked bonds also remain among analysts’ preferred options. These securities pay a fixed rate on top of inflation, although longer-maturity bonds can fluctuate more in price if investors need to sell before they mature.
Marcelo Freller, an investment product strategist at C6 Bank, said recent volatility in Brazilian interest-rate futures, the dollar and the stock market had prompted a more conservative approach to fixed income. He favors post-fixed securities and sees inflation-linked bonds maturing within three years as an opportunity.
A C6 Bank estimate puts the net real return on a one-year investment in Tesouro Selic bonds maturing in 2028 at 6.67%, after income tax and projected inflation. Pedro Moreira, a partner at One, said post-fixed investments remained the firm’s main preference, with no significant change in market conditions to justify a structural shift in portfolios.
C6 Bank also estimates that a one-year investment in a certificate of deposit (CDB) paying inflation plus 7.05% a year would deliver a net real return of 4.98%. Eduardo Amorim, a fixed-income specialist at Manchester Investimentos, said inflation-linked securities offer historically attractive real rates and inflation protection, while stressing the importance of considering investment horizons and risks.
The cautious stance comes amid sharp market swings following Lula’s election victory for a fourth term. The article reports that the stock market fell 18% in the previous week, its biggest decline since 2020, while the dollar rose 9.18%, its largest increase in 18 years. Interest-rate futures also climbed by more than 2%.
The market reaction reflects concern that the government may not take sufficient steps to balance public finances. Expectations of continued expansionary fiscal policy can raise the risk premium demanded by investors and push up long-term rates, while a stronger dollar can increase costs for businesses that rely on imported inputs and add pressure to inflation.
Economists surveyed in the Focus Bulletin raised their inflation forecast for the year from 5.19% to 5.22%. Their estimates also rose to 4.76% for 2027 and 4% for 2028. The article says inflation stood at 4.62% over the 12 months through October, above the central bank’s 4.5% ceiling for its target range.
Expectations for the Selic also increased. The forecast for the end of the year rose from 13.25% to 13.5%; projections for 2027, 2028 and 2029 rose to 12.5%, 11% and 10.25%, respectively.
Antônio Sanches, an allocation analyst at Rico, said the difference between a 0.25-percentage-point rate cut and holding rates steady matters less than the prospect of interest rates staying high for longer. He said Selic-linked investments could gain weight in portfolios, while higher rates may make riskier assets, including shares and real estate funds, less appealing.
Analysts did not rule out stocks, but urged investors to be selective and prepared for volatility. Arthur de Almeida, investment director at Suno Consultoria, said the recent market decline had made some assets cheaper and recommended prioritizing companies with conservative profiles and solid balance sheets. Moreira also said exposure to the dollar and dollar-denominated assets remained important for diversifying portfolios during periods of domestic stress.
Sources: Folha Mercado.