Federal public debt decreases 0.80% in July and totals R$ 6.14 trillion

The Brazilian Federal Public Debt registered a drop of R$49.24 billion (-0.80%) in nominal terms and ended the month ending July at R$6.14 trillion, compared to June. The Monthly Debt Report, released by the National Treasury on Tuesday (29), highlighted that this result was driven mainly by a 0.74% drop in the Internal Federal Public Securities Debt (DPMFi), which decreased from R$ 5.96 trillion in June (by net redemption) to R$5.91 trillion in July.

Furthermore, the External Federal Public Debt (DPFe) registered a reduction of 2.17% in nominal terms, totaling R$ 228.96 billion (US$ 48.29 billion) at the end of last month.

According to the Treasury, the external scenario of the economy influenced the fall in Brazilian public debt in the month, such as US debt securities and the Chinese trade balance.

In the local market, the yield curve showed volatility, influenced by the external scenario and expectations regarding the position of the Monetary Policy Committee (Copom) at the August meeting. Brazil’s Credit Default Swap (CDS) dropped to 164 basis points on July 31, a decrease of 6.78% from June.

“In July there was strong volatility in the external market, especially in US Treasuries, which started the month with a very intense increase motivated by activity data; in a second moment they fell with inflation data, expectations, and later they rose strongly again on one more occasion. There was also an appreciation of commodities in the month, which favored emerging countries”, said Roberto Lobarinhas, coordinator of Public Debt Operations.

The National Treasury report makes a forecast of what should be observed in August, which was marked by a growing aversion to risk, with investors considering the possibility of higher interest rates in the long term in the main world economies – in Brazil, the Copom began the downward trend by reducing the Selic rate to 13.25%.