Brazilian DI rates fall amid market confidence in Flávio Bolsonaro

Brazilian interbank deposit (DI) rates continued to fall for a second consecutive day following the first round of the presidential election. The market is reacting to results showing Senator Flávio Bolsonaro leading incumbent President Luiz Inácio Lula da Silva, alongside a significant majority of right-wing candidates elected to Congress.

Investors are anticipating a robust fiscal adjustment under a potential Bolsonaro administration, which has led to a reduction in risk premiums. The DI rate for January 2028 dropped to 12.61% from the previous session's 12.66%. Long-term rates also saw declines, with the January 2035 DI falling 7 basis points to 12.725%.

Market analysts suggest this movement reflects confidence that a new administration would prioritize public account adjustments, potentially improving inflation outlooks and the exchange rate. However, experts note that the long-term materialization of these benefits depends on the implementation of concrete fiscal measures to address the gross debt, which currently stands above 80% of GDP.