1. Goldman Sachs: Today, the Brazilian market may experience extreme market conditions, with the USD/RBNZ exchange rate appreciating by 10%, long-term government bond yields rising by 200 basis points, credit spreads widening by 30-40 basis points, and the stock market falling by 15%. The Brazilian market's circuit breaker mechanism is expected to be triggered soon, at which point trading will be primarily order-driven and subject to circuit breaker restrictions.
2. Citigroup: According to a survey of 73 equity and multi-asset fund managers, if Lula wins, 80% of respondents expect the Brazilian stock index abovevespa to fall by more than 5%, 63% expect the real to depreciate by more than 5% against the USD, and 67% expect the interest rate corresponding to interest rate swaps settling in January 2029 to rise by more than 100 basis points.
3. Wells Fargo: If Lula unexpectedly wins, the real/USD exchange rate may depreciate to around 5.30 after the market reopens.
4. Monte Bravo Securities: Predicts that if Lula wins, the Brazilian Ibovespa index could fall by 11% in the first hour of trading. This scenario implies the index could fall beyond the 10% threshold for triggering a circuit breaker.
5. Persevera Asset Management: A Lula victory could lead to a 7% depreciation of the real, and the possibility of the Brazilian stock market triggering a circuit breaker cannot be ruled out. They also cautioned that a market decline could be triggered by concentrated stop-loss orders, further amplifying the fall.
6. Lombard Odier: After a Lula victory, the market is likely to give back some of the gains previously generated by expectations of a Bolsonaro victory, and short-term volatility will remain high. However, the bank also points out that Brazilian asset valuations and its position as a major commodity exporter may provide some support to the market.
7. Bradesco Asset Management: The market will face a difficult trading day, requiring a reassessment of the pricing of various assets. Their view emphasizes that investors need to quickly adjust their positions after the election results exceed market expectations.
8. Wagner Investimentos: The Brazilian stock market may trigger a circuit breaker at the opening, and dollar trading may also be suspended due to reaching volatility limits; the dollar/real exchange rate may reach 5.50.
