Brazilian assets surge after first-round vote

Brazilian assets signaled a sharp rally following the first-round presidential election results on October 4, 2026. The EWZ ETF, which tracks large and mid-cap Brazilian equities, rose more than 8% in New York trading on Sunday night after opposition candidate Flávio Bolsonaro led the first phase with an advantage of over 2 percentage points, or 2.5 million votes, over President Luiz Inácio Lula da Silva.

The Ibovespa index closed at 192,115 points on Friday, October 2, 2026, and is positioned to approach its record high of 199,000 points set in April 2026. Fernando Siqueira, head of research at Eleven Research, stated on LinkedIn that the candidate's chances of winning are high and that the recent market trend should continue over coming days.

In fixed income, long-term interest rates are expected to retreat. The real yield on the IPCA+ 2040 bond fell from 7.8% to 7.2% between July and the election, producing an 8.6% gain, or 370% of the CDI. Analysts anticipate the IPCA+ 2050 bond will slip below 7% annually, while the 2040 paper could near its February low of 6.96%. The fixed-rate 2032 note is projected to drop below 14% annually for the first time since May.

Elisa Machado, partner and chief economist at KAT Investimentos, stated that investor sentiment reflects expectations of a shift in fiscal trajectory rather than political figures alone. The opposition campaign proposed public spending cuts of 1.5% of gross domestic product, while the benchmark Selic rate stands at 13.75%. Brazil's public debt increased from 8.5 trillion reais, or 71.7% of GDP, to 11 trillion reais, or 82.9% of GDP, with debt interest costs exceeding 1 trillion reais, or 8% of GDP, following a 0.48% primary deficit in 2025.