See how your investments look with the fall of the Selic – 12/13/2023 – Market

The Central Bank reduced the Selic — the basic interest rate — to 11.75% per year this Wednesday (13), as expected by the market. The cut automatically reduces the profitability of fixed income, but, in most investments, it was already priced.

“Today’s monetary policy decisions do not change the interest rate curve because they were already expected and were priced in. Fixed income remains attractive”, says Gustavo Bertotti, chief economist at Messem Investimentos. The Federal Reserve, the central bank of the United States, was also unsurprising, maintaining its basic interest rate in the range of 5.25% to 5.50%.

The interest curve is the financial market’s pricing of future interest rates, a kind of bet on how high the Selic rate will be in the coming months and years.

According to calculations by Rafael Haddad, financial planner at C6 Bank, on average, the market expects annual interest of 10.90% in six months, 10.42% in one year and 10% in two years. These rates refer to the DI, which is equivalent to the CDI. This indicator guides the profitability of fixed income and follows the Selic closely, generally being 0.1 percentage point lower.

Considering the 3.93% inflation predicted by economists for 2024, these rates are equivalent to real interest, that is, a gain in purchasing power of 6.49%. Even savings, which have one of the lowest returns among fixed income products, will have a net gain above inflation of 4%.

“Real interest rates in Brazil remain high even with Selic at 10%. And there are still attractive fixed-rate private credit bonds, with annual interest rates of 11% to 12%, but there is issuer risk,” says Bertotti.

Based on the expected cuts for Selic in the coming months, Rafael Haddad calculates that investments in private debt securities exempt from Income Tax, such as LCI (Real Estate Credit Letter), LCA (Agribusiness Credit Letter) and incentivized debentures , will be the most attractive. For these instruments, which yield 96% of the CDI, he projects a real net gain, discounting income tax and projected inflation, of 5.86% in one year. For fixed rates, at 11.75% per year, the expected net profitability is 5.57%.

Other attractive assets, according to experts, are pre-fixed Treasury bonds and post-fixed bonds linked to inflation. The prefix for 2029 has a gross annual profitability of 10.45% and the IPCA+ for the same year yields 5.41% in addition to inflation. In these instruments, however, it is necessary to pay attention to the deadline, as, in the case of early redemption, it is possible to lose money.

“Fixed income still has great opportunities, but, with interest rates losing strength, we will start to see a stronger migration to variable income next year”, says Bertotti.

The economist recommends investing in shares of large companies on the Brazilian Stock Exchange, called blue chips, depending on the investor’s risk profile. The most conservative should avoid this modality.

Bruna Sene, analyst at Nova Futura Investimentos, also says she is confident about the Stock Exchange. “The expectation is that Ibovespa will maintain its upward trajectory in December. As a positive sectoral highlight, we have the cyclical consumption sector, which faced challenges in recent months, but has recovered strongly.”

In addition to the fall in Brazilian interest rates, the expectation of lower rates in the United States also boosts risk assets. There, the financial market is betting that interest rate cuts will begin in March, taking the rate to the range of 5% to 5.25%.