14.05.202615:01:51UTC+00Brazil 10-Year Bond Yield Nears 1-Year High

The yield on Brazil’s 10-year government bond climbed to 14.3% in mid-May, nearing a one-year high amid mounting political and inflation worries. Markets reacted to reports alleging links between Senator Flávio Bolsonaro—an October presidential candidate and widely seen as President Luiz Inácio Lula da Silva’s main rival—and Daniel Vorcaro, the owner of failed lender Banco Master, who has been charged with fraud. Investors judged that the accusations could undermine Bolsonaro’s candidacy. Vorcaro was jailed in March on charges of bribing a former central bank director. At the same time, inflation risks continued to bolster expectations that interest rates will remain elevated. In its latest meeting minutes, the Central Bank of Brazil underscored persistent inflationary pressures, noting that the conflict in the Middle East has pushed up energy prices and threatens to transmit price increases more broadly across the economy.