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1st Round of Presidential Elections Proves Market Friendly

  • A solid start to the session for Brazilian assets, with BRL and local equities outperforming all others in the region, while local swap rates are under pressure.
  • Moves follow the 1st round of the Presidential election being much closer than expected, with Lula on 48% vs. Bolsonaro's 43%, with both candidates likely coming under pressure to appeal to the centrist vote in the run-off due at the end of October.
  • Markets are on watch for the resumption of the campaign and in particular any endorsement from those eliminated in the first round (center-left Gomes and center-right Tebet). Expectations area for the Gomes supporters to naturally tend toward Lula, while Tebet's support could be more evenly split the two remaining candidates.
  • USD/BRL gapped lower, touching the lowest level since Sep23 to narrow the gap with the 50-dma at 5.1963.
MNI London Bureau | +44 203-865-3809 |
MNI London Bureau | +44 203-865-3809 |

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