Brazilian bond funds are receiving a larger influx of capital now than at any time since 2007. This net inflow is lowering yields, and market experts have predicted that this change will have an impact on stocks, according to Bloomberg.
A total of 2.8 billion reais ($1.5 billion) flowed into fixed-income funds in October, the media outlet reports. This influx raised the total for the year to 67 billion reais, which is the highest amount since 2007.
Data compiled by Bloomberg indicates that in the last four months, yields of notes due to mature in 2014 have fallen 239 basis points to 10.46 percent. Comparatively, yields on Mexican government bonds dropped 62 basis points to 4.85 percent during the same time frame.
Bloomberg reports that Brazil intfervened in its economy to keep the value of the real low for most of the last 30 months. The country’s central bank was prompted to use derivatives to appreciate the real in September after the currency experienced its strongest five-day drop in more than 10 years.