The victory of Lula would already be written off by pricesThe victory of Lula was anticipated by prices, while the victory of Bolsonaro was already incorporated into local interest rates. Short-term tensions amplify initial market adjustment, creating an institutional and transition risk. Currency depreciation has increased inflation expectations and local interest rates, increasing government burden and comprehensive fiscal pressures. Brazil's external balance remains resilient, but sustained bond spreads require recurring spending reforms and a credible path for debt stabilization, not measures on the revenue side, piecemeal changes or mere election rhetoric shifts.

The online report on Finance and Investments of Affaires & Finance in collaboration with Anasf Stefania Aoi, Marco Cimminella, Giulia Cimpanelli, Vito de Ceglia, Luigi Dell'Olio, Mario Di Ciommo, Silvano Di Meo, Sibilla Di Palma, Massimo Franzosi, Marco Frojo, Andrea Frolla, Mariano Mangia, Jessica Muller Castagliuolo Stefano Fiori phone: 0649822539 email: stefano.fiori@repubblica.it secretary_affairs_investments_republica.it. Key signals will be that Lula will name a credible economic team to the markets' eyes, will gain political power, present an adjusted figure based on spending with support from the Congress.

The composition of the new government team and the fiscal plan will be considered important factors for analysis. Short-term tensions have been exacerbated by Flávio Bolsonaro's rejection of the result, creating an institutional risk and transition challenge. Attention has now shifted rapidly from the election outcome to the composition of the government team and the fiscal plan. The markets have noted a difference between polls and reality evaluations, but expectations are already high. A victory for Luís Inácio Lula da Silva would have been anticipated by prices, while a victory for Flávio Bolsonaro was already incorporated into local interest rates. Changes in expectations have had immediate impact on the market, increasing comprehensive tax pressures and raising inflationary expectations.

However, depreciation of the currency serves as a critical channel for Brazilian markets.