Fixed Income and Currency Strategist

Gautam Jain, PhD, CFA

Gautam Jain has over 25 years of experience covering global emerging fixed income and currency markets, both as a strategist and a portfolio manager. He has worked in buy-side and sell-side firms, including The Rohatyn Group (TRG Management), Barclays Capital, and Millennium Partners. He has helped manage emerging markets local-currency and hard-currency debt funds. The assets that he covers include currencies, interest rates, sovereign credits, and related derivatives. He specializes in portfolio construction, smart-beta index creation, and asset allocation. Mr. Jain holds a Ph.D. in Operations Research from Columbia University and is a CFA charter holder.

The Hump and Kink in Brazil’s Yield Curve to Become More Pronounced

Brazilian Real Set to Outperform Other EM Currencies in the Near Term

Rates 10y Dashboard: Does the Curve Flattening in Brazil Offer an Opportunity?

Alpha Bites: A DV01-Neutral 5s10s Steepener in Brazil

Battle Lines Drawn As BABA Builds Out First/Last-Mile Capacity; But Who Will Fund 75+ Bn CNY CapEx?

FX & Rates

<ul>
<li>Brazil's rate curve has gone through significant transformations in the past few months, with the curve currently exhibiting a hump in the front end and a kink 3 years out.</li>
<li>The driver behind the hump has been the aggressive rate hikes and the kink is resulting from increasing risk premium in the long end arising from fiscal and election uncertainty.</li>
<li>I expect the kink to get pronounced as more rate cuts get priced with inflation coming off the peak and growth slowing, while risk premium increases heading into the election.</li>
</ul>


Brazil's rate curve has gone through significant transformations in the past few months, with the curve currently exhibiting a hump in the front end and a kink 3 years out.
The driver behind the hump has been the aggressive rate hikes and the kink is resulting from increasing risk premium in the long end arising from fiscal and election uncertainty.
I expect the kink to get pronounced as more rate cuts get priced with inflation coming off the peak and growth slowing, while risk premium increases heading into the election.


A Hump and a Kink in Brazil’s Yield Curve

BRL

A Hump and a Kink in Brazil’s Yield Curve