Possible scenario

Fiscal Credibility Breaks

30%its chance, of the story’s futures

−1.0%on the S&P 500, if it happens

Investors conclude that Lula’s runoff victory will revive the spending path that weakened the real in 2024 and forced later cuts. The rout extends as markets price wider deficits, higher Brazilian policy rates and renewed pressure on state-linked assets.

What it moves

Finance−1.1%
Non-Energy Materials−0.7%
Riskier companies' borrowing costs▲ up
Market volatility▲ up

Sectors in percent; other series by direction only.

Each figure is the modeled move of the S&P 500 if the outcome occurs. For information only. Not investment advice.

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