Brazil DI futures fall as market prices election shift

Brazilian interest rate futures fell on October 9, 2026, as traders adjusted positions around the presidential election runoff. Contracts on the interbank deposit curve declined firmly across medium and long maturities, while September consumer inflation surpassed expectations without halting the market rally.

At the market close, the DI contract for January 2027 stood at 13.439%, compared with 13.441% in the prior settlement. The January 2029 contract dropped from 12.315% to 12.220%, and the January 2031 contract fell from 12.447% to 12.245%. Across the full week, the yield curve flattened sharply, losing roughly 150 basis points on the January 2029 and January 2031 contracts while short-term rates traded sideways.

The market move followed new polling data for the second round. An Atlas/Bloomberg poll showed Senator Flávio Bolsonaro leading President Luiz Inácio Lula da Silva with 51.1% against 45.7% of total voting intentions, or 52.8% to 47.2% in valid votes. A Datafolha poll released on October 8 placed Bolsonaro at 49% against Lula's 45% of total votes, with a 2-percentage-point margin of error, and 52% to 48% in valid votes. Fernando Saad Benatti, global strategist at Avenue, noted that market participants are pricing higher odds of a more disciplined fiscal policy under an opposition victory, which supported lower rate expectations.

The decline in yield curves came despite official price data. The IPCA index moved from a 0.32% deflation in August to an advance of 0.82% in September, near the 0.83% ceiling projected in market estimates. Santander economist Adriano Valladão raised the bank's 2026 IPCA inflation forecast from 5.0% to 5.2%. In contrast, consultancy BuysideBrazil maintained its 2026 inflation forecast at 5.1% and held its year-end Selic forecast at 13.25%, but lowered its projected terminal Selic rate for 2027 from 12% to 11% on expectations of fiscal tightening.