Brazil's Lula win to hit Tesouro Direto yields, reversing post-first-round rally

infomoney.com.br (Portuguese) —

Brazilian President Luiz Inácio Lula da Silva's re-election on Sunday is expected to cause a sharp rise in Tesouro Direto bond yields on Monday, potentially reversing recent gains. Managers predict that fixed-rate and inflation-linked bonds will give back part or all of the yield drop seen after the first round, when markets bet on challenger Flávio Bolsonaro. A 1 percentage point yield increase could reduce the IPCA+ 2050 bond's price by about 20%. The market now awaits the Copom meeting on November 4 and the choice of Finance Minister. Short-term investors may find safety in post-fixed Tesouro Selic bonds, while long-term investors could see opportunities after the repricing.


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