Brazil: 10-Year Bond Yield Drops From 3-Month High.

The yield on Brazil’s 10 year government bond fell to 13.65% from three month highs reached on January 20th as stronger demand collided with easing near term funding pressures and a still powerful rate cushion. Foreign inflows have been a key driver, with non-residents adding more than R$12bn to Brazilian equities by late January and extending that demand into local bonds, helping absorb supply and push prices higher. This appetite is reinforced by a Selic rate still at 15% and market pricing that delays the first cut until March, preserving highly attractive real yields and sustaining carry driven interest in longer dated debt. Fiscal and external dynamics have also helped compress risk premia, as record tax revenues of R$2.89tn in 2025 eased immediate budget strain and foreign direct investment largely covered the 2025 current account gap, reducing rollover and FX funding risks.