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SearchThe first-round result boosted the real and other Brazilian assets and lowered the Treasury’s financing costs. Investors, however, are making the rally’s continuation conditional on credible fiscal proposals capable of securing parliamentary support.
The result of the first round of Brazil’s elections gave markets an immediate boost. Flávio Bolsonaro, senator and candidate for the Liberal Party, received 47.03% of the valid votes, compared with 45.16% for President Luiz Inácio Lula da Silva, according to the results cited by Finect. Neither reached the majority needed to win in the first round, so they will face each other in the second round on October 25, 2026.
The reaction reflects an expectation, not an economic policy that has already been defined: some investors believe a Bolsonaro presidency would be more willing to contain the deficit and stabilize public finances. For now, the market is giving him the benefit of the doubt.
Bloomberg reported that the Brazilian real appreciated by 3% at the São Paulo open and that the iShares MSCI Brazil ETF rose 15% in pre-market trading in New York. Finect also reported a rise of nearly 4% in real futures in Chicago, although these changes occurred in different markets and at different points in the trading day.
The response was not limited to currencies and equities. Estadão reported that interest rates on maturities relevant to public debt fell, making it cheaper for the Treasury to issue new financing. The article does not quantify the decline. The move provides immediate relief for the government’s borrowing costs, but it does not demonstrate that the trajectory of the debt has changed durably.
Investors also viewed the gains made by right-wing and center-right candidates at other levels of government favorably. For the asset managers cited by Bloomberg and Finect, the result could make governing easier and support an economic agenda more favorable to fiscal consolidation. This is an interpretation of the possible political balance, not a guarantee that Congress will approve specific measures.
The main reason for caution is that Flávio Bolsonaro had not presented a detailed fiscal plan, according to the news reports. Markets expect a potential government to propose measures to contain the imbalance in public finances, but forecasts about his intentions are not equivalent to approved or implemented commitments.
Fernando Dantas, a columnist for Estadão, argues that continued favorable reception would depend on three factors: appointments to the future economic team, the credibility of an adjustment program, and the ability to secure sufficient support in Congress. He also warns of the political difficulties of advancing unpopular measures. This is an opinion analysis of the conditions needed to sustain confidence, not a statement that these decisions have been made.
The asset managers cited by Finect express similar caution. Thierry Larose, of Vontobel, said assets could continue to benefit if credible fiscal measures with institutional backing are announced soon. Thomas Haugaard, of Janus Henderson, said the possibility of stabilizing the credit rating would depend on a Bolsonaro victory and that there would be greater clarity once the result of the second round was known.
The warning also applies to the immediate reaction: disappointment on fiscal policy could shorten the period of optimism. Diego Barnuevo, of Ebury, noted that Brazil’s public debt exceeds 82% of GDP and conveyed concerns about the lack of detail in fiscal announcements. The figure provides context for the challenge, but by itself it does not allow daily market movements to be attributed to a single cause.
Until October 25, prices could continue to respond to changes in electoral expectations, as the sources anticipate. Afterward, if Bolsonaro wins, investors’ attention would shift from expectations to decisions: who would be part of the economic team, what measures would be proposed, and what legislative support they would have. If Lula wins, the market would also have to adjust its forecasts to that outcome.
Therefore, the rally observed describes a reaction to a new political scenario, not a guarantee of future returns or confirmation that Brazil will reduce its deficit or debt. The second round and the details of fiscal policy will be decisive in assessing whether the benefit of the doubt turns into sustained confidence.
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