Brazilian Futures Yields Head for Sixth Weekly Drop on Inflation

Yields on Brazilian interest-rate futures contracts headed for a sixth weekly drop as traders stepped up bets for lower borrowing costs after a report showed consumer prices increased less than expected this month.

The yield on the contract due in January 2013 fell three basis points, or 0.03 percentage point, to 9.19 percent at 9:43 a.m. in Sao Paulo, bringing the weekly decline to 10 basis points.

Consumer prices as measured by the IPCA-15 index increased 0.53 percent through mid-February, the national statistics agency said today. It was expected to rise 0.56 percent, the median forecast of 46 economists surveyed by Bloomberg. The second preview of the IGP-M index measuring consumer, wholesale and construction prices fell 0.11 percent this month through yesterday, more than the 0.02 percent median estimate of 20 economists.

“Food is pushing the consumer price index lower, and soft commodities are falling,” helping drive wholesale prices down, Newton Rosa, chief economist at SulAmerica Investimentos, said by phone from Sao Paulo. “This makes the central bank more comfortable” about lowering the benchmark lending rate.

The real climbed 0.1 percent to 1.7150 per U.S. dollar, from 1.7164 yesterday.

To contact the reporters on this story: Josue Leonel in Sao Paulo at jleonel@bloomberg.net; Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net