Brazil suspends government bond trading after rate spike on Lula win

Brazil's Tesouro Direto suspended government bond trading indefinitely on Monday after a sharp spike in interest rates, following investor concerns over President Lula's election victory and its impact on public finances. The suspension occurred at 10am, with rates on fixed-income securities surging dramatically. The Tesouro Nacional held an extraordinary auction, repurchasing 8.4 million pre-fixed bonds worth approximately R$7.1 billion to ease market pressure, while three scheduled auctions were cancelled. Yields on popular bonds jumped sharply, with the Tesouro Prefixado 2032 rising from 12.89% to 15.78% annually. The IPCA+ 2032 inflation-linked bond increased from 6.76% to 8.10% above inflation, reflecting heightened risk perception and expectations of higher borrowing costs.