Still under the effect of the perception that the right-wing presidential candidate in 2026 tends to be Senator Flávio Bolsonaro (PL-RJ) and that the entry of the governor of São Paulo, Tarcísio de Freitas (Republicans), in the presidential race is becoming increasingly less likely, future interest rates rose steadily in the trading session this Wednesday (17).
In line with increasing concerns about the fiscal framework – as a possible new Lula government would tend, in the market’s view, to adopt a more expansionist spending policy, while Tarcísio could implement an adjustment in public accounts -, the intermediate and long vertices of the forward curve operated at the highest levels since October in the session.
The short part rose, but at a lesser intensity, still reflecting the conservative tone of the latest minutes of the Central Bank’s Monetary Policy Committee (Copom), while the committee’s lack of signaling about the start of the cut cycle continued to dampen reduction bets in January.
After business ended, the Interbank Deposit contract rate increased from 13.672% in Tuesday’s adjustment to 13.815%. The DI for January 2029 increased from 13.099% in the previous adjustment to 13.330% – the highest closing level since October 14th. The DI for January 2031 was 13.635%, also the highest level since October 14, coming from 13.386% in the adjustment. The Treasuries curve opened slightly this Wednesday, but the external scenario took a backseat to the stress caused by the local political situation.
Still digested by the market and discussed at fixed income tables, the Genial/Quaest survey published this Tuesday showed that the son of former president Jair Bolsonaro has an advantage over Tarcísio among voters opposing President Lula. Late this afternoon, Flávio said that he met with businesspeople in Faria Lima last Friday (12) to show that his candidacy is “viable”, and also to “calm down animosities” about Tarcísio. On Tuesday night (16), he reiterated that his dispute in the election is “irreversible”.
Without any concrete facts, but evaluating signals from both sides of the political spectrum, investors are pessimistic about the senator’s apparent resistance to giving up his candidacy, at the same time as they see Tarcísio’s name losing strength, which has led to an increase in risk premiums embedded in future rates. This is because the governor is seen as the candidate who would be most competitive against Lula and also as the most likely to balance fiscal policy in 2027.
Chief economist at CM Capital Markets, Carla Argenta says that the market is increasingly paying attention to next year’s elections. Argenta mentions not only the survey published yesterday, but a set of elements that have made investors start to consider that Tarcísio will not be the opposition candidate. “It is the factor that boosted the long part of the curve, with the market seeing the greater probability of a Lula 4 government. These are political movements in interest pressure,” he said.
“The data from all the surveys pave this path so that the market no longer consolidates the scenario of a Tarcísio candidacy. It is a set of surveys, rumors and changes in the agents’ perception”, observes Argenta, adding that the head of the São Paulo Executive himself never officially announced that he would run for president.
According to CM’s chief economist, the political imbroglio reinforces her perspective that the Selic will not be reduced at the first Copom meeting in 2026, but rather in March. “We will evaluate whether the RPM Monetary Policy Report brings any changes to the Central Bank’s expectations, but it doesn’t look like it will be cut from January onwards”, he commented.
In a scenario review released this Wednesday, PicPay reduced its projection for the Selic at the end of next year, from 12.5% to 12%, but also rules out flexibility in January. The cut should occur in March, but is conditioned on the consolidation of the slowdown in activity, continued cooling of inflation cores and the absence of new adverse shocks, says the institution.
