Possible scenario

Policy Clash Escalates

20%its chance, of the story’s futures

−0.7%on the S&P 500, if it happens

A less likely but important downside scenario is that Lula’s coalition renews pressure on the central bank over inflation targets, bank spreads or the pace of Selic cuts. This would revive concerns about central-bank autonomy and deepen the post-election risk premium in Brazilian assets.

What it moves

Consumer Cyclicals−0.9%
Finance−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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