Possible scenario

Policy Reassurance Rally

30%its chance, of the story’s futures

+0.7%on the S&P 500, if it happens

A plausible rebound follows if Lula’s team tries to contain the financial damage with explicit commitments to fiscal responsibility and central-bank independence. Given the scale of the three-day decline, even modestly orthodox signals could trigger short covering in Brazilian equities.

What it moves

Finance+0.7%
Energy+0.4%
Market volatility▼ down
Riskier companies' borrowing costs▼ down

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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