Brazil Rates and the BCB: Selic, DI Curve, Fiscal — October 4, 2026
Brazil's presidential election dominates market sentiment as speculators build long real positions and the DI curve digests electoral uncertainty. Fiscal pressures loom for the next administration with public debt approaching 90% of GDP by 2029, while Selic expectations remain anchored near 13.75% ahead of the November Copom meeting.
Brazil Rates and the BCB: Selic, DI Curve, Fiscal — October 4, 2026
Top developments
Speculators Raise Real Bets to 60,538 Contracts Before Election Vote
Net long positions on the Brazilian real hit 60,538 contracts on September 29, according to CFTC data cited by market participants. This build-up reflects hedging ahead of Sunday's presidential ballot, which will determine economic policy direction for the next four years. Large foreign investors are positioning for currency moves tied to fiscal and monetary outcomes.
DI Curve Absorbs Election Calm; September 30 Close Shows Modest Decline
The DI curve on September 30 closed nearly flat, with limited direction after early losses of ~5 basis points proved unsustainable. The January 2028 DI contract fell to 13.55% from 13.575%, while the January 2031 contract retreated to 13.945% from 13.98%. The lack of conviction reflects investors digesting both external pressure from U.S. Treasuries and domestic electoral uncertainty.
%3Astrip_icc()%2Fi.s3.glbimg.com%2Fv1%2FAUTH_63b422c2caee4269b8b34177e8876b93%2Finternal_photos%2Fbs%2F2025%2FB%2Fd%2FrBRUB5QuGfAApzzXNNEw%2Fjuros-percentual-taxas-rdne-pexels.jpg)
Fiscal Debt Path Threatens Incoming Administration
Government projections sent to Congress show public debt approaching 90% of GDP by 2029 if the primary deficit piso (floor) of the fiscal framework is pursued. Current public spending has reached 19.55% of PIB—the highest since the pandemic—leaving minimal room for new initiatives. An August fiscal deficit of R$13.6 billion marked the best reading for that month in five years, yet year-to-date deficits totaled R$95 billion, worse than 2024.
Tesouro Direto Surges Over 100% Since August 2025
Brazilian savers have flooded the Treasury direct platform, with sales climbing more than 100% since August 2025 amid high interest rates and the new Reserva product. High yields on fixed-income securities have made government bonds attractive to retail investors seeking inflation protection.
Local view
O Globo reported on September 25 that public spending levels will force the next administration to undertake painful program reviews, as the government's discretionary space has nearly evaporated. Specialists warn that 2027 budget targets will require either spending cuts or revenue measures unpopular with voters.
Veja noted on October 4 that the newly elected Congress will inherit an economy with rising public debt and tight fiscal constraints, with the tax reform entering a decisive phase in 2027. Economic discussions will center on debt sustainability and expenditure control rather than new initiatives.
Valor Econômico tracked on September 28–30 how external pressure from U.S. Treasuries and polling swings pushed the DI curve higher intraday, only for electoral relief to trim gains by session close. October 2 coverage highlighted that industrial production and U.S. payrolls data will set the tone for Selic market bets following the election.
Context & numbers
- Current Selic rate: 13.75% (after five consecutive 25-bp cuts)
- DI January 2027 (Sep 30): 13.55%
- DI January 2031 (Sep 30): 13.945%
- Public debt trajectory: ~90% of GDP by 2029 under current path
- August 2026 fiscal deficit: R$13.6 billion (best for that month in 5 years)
- YTD fiscal deficit (2026): R$95 billion (worse than 2024)
- Public spending as % of PIB: 19.55% (highest since pandemic)
- Brazilian real speculative longs (Sep 29 CFTC): 60,538 contracts
- Tesouro Direto sales growth (Aug 2025 – Oct 2026): >100%
On the radar
- October 4 presidential election: First-round voting begins Sunday; runoff (if needed) scheduled for November 25. Market volatility likely to persist until results confirm fiscal direction.
- November Copom meeting: Selic futures currently price modest odds for continued 25-bp cuts; outcome dependent on inflation prints and electoral clarity.
- Focus survey releases: Expect fresh inflation and Selic expectations each Monday; watch for upward revisions if election outcome signals looser fiscal discipline.
- IPCA-15 tracking: September mid-month inflation rose 0.70%, pushing 12-month rate to 4.47%, near the 4.5% ceiling of Brazil's target band. October prints will signal whether price pressures persist post-election.
This content was collected, curated, and summarized entirely by AI — including how and what to gather. It may contain inaccuracies. Crew does not guarantee the accuracy of any information presented here. Always verify facts on your own before acting on them. Crew assumes no legal liability for any consequences arising from reliance on this content.
Powered by
