Brazil central bank President Alexandre Tombini said traders have pushed swap rates too far, prompting them to pare bets policy makers will accelerate the pace of interest rate increases.
“The recent movement seen in interest rates in the market has incorporated excessive premium,” Tombini said in a two-paragraph statement posted on the bank’s website yesterday that also cautioned investors against one-way bets in the currency market.
Yields on swap contracts due in January 2015 fell 29 basis points, or 0.29 percentage point, to 10.37 percent at 9:08 a.m. local time, after soaring 0.33 percentage point yesterday. Traders had bet the central bank would raise rates by 75 basis points at its meeting next week.
Read full article…