Brazil Yields Rise on Election and Higher Inflation Forecasts

2026-09-28 15:18 By Isabela Couto 1 min. read

Brazil’s 10-year government bond yield rose to around 14.25% in late September following recent election polls showing President Lula widening his lead and a rise in inflation projections.

A new poll showed Lula leading by a larger margin in first-round voting intentions and opening a two-point lead over Flávio Bolsonaro in a potential runoff, still within the margin for a technical tie.

Bolsonaro is viewed by markets as more fiscally restrictive amid elevated domestic yields and weak business activity.

Meanwhile, the BCB’s Focus survey showed that the market raised its 2026 inflation forecast from 4.92% to 4.99%, while the year-end 2026 Selic forecast remained at 13.50%.

The 2026 GDP growth forecast fell from 1.88% to 1.86%, marking its third consecutive downward revision.

The BCB cut its policy rate by 25 bps to 13.75% at its September meeting and left its next steps open, while Copom’s minutes were more hawkish than expected.



News Stream
Brazil Yields Rise on Election and Higher Inflation Forecasts
Brazil’s 10-year government bond yield rose to around 14.25% in late September following recent election polls showing President Lula widening his lead and a rise in inflation projections. A new poll showed Lula leading by a larger margin in first-round voting intentions and opening a two-point lead over Flávio Bolsonaro in a potential runoff, still within the margin for a technical tie. Bolsonaro is viewed by markets as more fiscally restrictive amid elevated domestic yields and weak business activity. Meanwhile, the BCB’s Focus survey showed that the market raised its 2026 inflation forecast from 4.92% to 4.99%, while the year-end 2026 Selic forecast remained at 13.50%. The 2026 GDP growth forecast fell from 1.88% to 1.86%, marking its third consecutive downward revision. The BCB cut its policy rate by 25 bps to 13.75% at its September meeting and left its next steps open, while Copom’s minutes were more hawkish than expected.
2026-09-28
Brazil 10-Year Yield Falls as Global Surge Eases
Brazil’s 10-year government bond yield fell to 14.1% in late September as falling oil prices halted a sharp sell-off in global bonds. Lower oil prices tempered inflation concerns, pausing the broader bond-market sell-off, amid expectations of progress in diplomatic efforts between Iran and the US. Meanwhile, domestic factors put upward pressure on yields, as Brazil’s mid-month headline inflation rose to 4.47% year over year in September from 4.24% previously, exceeding the 4.30% market consensus. Persistent inflationary pressures could reduce prospects for the continuation of the Selic easing cycle. The BCB cut its policy rate by 25 bps to 13.75% at its September meeting and left its next steps open, while Copom’s minutes were more hawkish than expected. A recent election poll also showed President Lula maintaining a numerical lead over Flávio Bolsonaro in a potential second-round runoff.
2026-09-25
Brazil 10-Year Yield Falls After Selic Cut
Brazil's 10-year government bond yield fell to 14.25% from the two-week high of 14.5% on September 15th amid a pullback in energy prices and rate cut by the Central Bank of Brazil. The BCB cut its rate by 25bps to 13.75% and left its next steps open, saying that the current environment of uncertainty calls for composure and caution in the conduct of monetary policy. It was the final monetary policy meeting before the presidential election in October. Yields were also pressured by a pullback in oil prices, limiting the risks of a hawkish turn by the central bank. Meanwhile, gains by Flávio Bolsonaro in recent presidential election polls have supported Brazilian bonds, as markets view Bolsonaro as fiscally restrictive, while elevated domestic yields and weak business activity continue to weigh on the economic outlook.
2026-09-17