Local Debt To Continue Outperformance

Since we set out our bullish view on Brazilian local debt at the beginning of August yields have compressed rapidly, breaking though multi-month resistance at both the short- and long-end of the curve. The Generic 2-year bond is now on a firm downward trajectory, with further compression towards all-time lows around the 9.6% level very much on the cards over the coming weeks. At the longer-end, yields on the Generic 10-Year instrument, issued in March, have continued their rapid fall, and we are targeting a move towards the 11.0% area in the short term.

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