Why Did the Dollar and Future Interest Rates Fall Today?
The financial market reacted to the release of new presidential election polls showing Senator Flávio Bolsonaro (PL) maintaining a numerical lead against President Luiz Inácio Lula da Silva (PT) just days before the runoff vote. Market participants interpreted the higher probability of an opposition victory as a reason for a quick contraction in risk premiums, pushing the spot dollar down to the R$ 5.01 level and reversing the recent rise in future interest rate contracts (DIs) and Tesouro Direto bonds.
Polls released by Real Time Big Data, AtlasIntel, and BTG/Nexus captured the attention of traders. Market professionals interviewed by Reuters tied the relief in DI rates directly to the electoral landscape, noting that the long end of the curve benefited the most as defensive positions built up earlier in the week were unwound.
Beyond domestic dynamics, local relief moved in tandem with the external environment. The yield on the 10-year U.S. Treasury note—the main global benchmark for risk pricing—retreated 3 basis points in the morning, trading at 5.106%, which contributed to the global depreciation of the U.S. dollar against emerging-market currencies.
Down 1.00% in the session, accumulating an 8.04% loss for the year.
Fell 12 basis points from the previous adjustment of 12.889%.
Firm decline of 16 basis points at the long end of the forward curve.
Gave back 14 bps, returning to its lowest level since October 15.
What Did the Election Polls Show to Move Prices?
The series of polling surveys published between Monday and Tuesday consolidated the opposition candidate ahead in valid votes, albeit within tight margins. The market had been demanding high premiums amid uncertainty over the election outcome, and the continued numerical advantage was interpreted by trading desks as a scenario pointing toward the continuation of fiscal policies more closely aligned with spending discipline.
In the Real Time Big Data poll, conducted between October 15 and 19, Flávio Bolsonaro appeared with 52% of valid votes, compared to 48% for Lula. In total votes, the tally showed 48% to 45% in favor of the senator.
Meanwhile, in the survey by AtlasIntel (commissioned by Bloomberg), the PL senator registered 49.8% against 47.6% for the current president. The poll's margin of error is 1 percentage point, placing Flávio Bolsonaro 0.2 points above the technical tie threshold. In the BTG/Nexus poll, the scenario showed a strict technical tie within the 2-percentage-point margin of error, with 46.5% for Flávio and 45.9% for Lula.
Fernando Bergallo, director at advisory firm FB Capital, pointed out that although the polls indicated tight margins between the candidates, the confirmation of the numerical lead sustained the retreat in pressure on B3 future contracts and prompted currency sellers to unwind short-term long positions.
How Did Tesouro Direto Rates Respond to the Movement?
Fixed-rate government bonds gave back practically all the gains accumulated in the previous session, directly benefiting investors who already held the securities in their portfolios through mark-to-market gains. According to InfoMoney at Tuesday's market open, the Tesouro Prefixado 2029 led the nominal declines on the Tesouro Direto platform.
The rate offered by the Tesouro Prefixado 2029 dropped from 12.83% to 12.69% per year, a 14-basis-point decline. This level is the lowest recorded for the bond since the close of Thursday, October 15, when the asset finished at 12.68%.
In the longer fixed-income tenors, the movement followed the same relieving trend:
- Tesouro Prefixado 2032: the rate fell from 13.04% to 12.91% per year (a 13-basis-point drop).
- Tesouro Prefixado with Semiannual Interest 2037: the yield retreated from 13.04% to 12.94% per year (-10 basis points).
- Tesouro IPCA+ 2032: a more modest decline of 6 basis points, moving from IPCA + 6.86% to IPCA + 6.80% per year.
- Tesouro IPCA+ 2050 and 2060: declines of 4 basis points each, with the IPCA+ 2050 moving to IPCA + 6.70% and the IPCA+ with Interest 2060 easing to IPCA + 6.71%.
What Does This Rate Compression Change in Your Portfolio?
The drop in future rates generates an immediate appreciation in the unit price (PU) of bonds already contracted, an effect known as positive mark-to-market. When the yield curve drops, a bond issued at higher rates in the past becomes worth more on the secondary market if the investor wishes to sell it before maturity.
Tesouro IPCA+ and Fixed-Rate Bonds: If you bought securities during Monday's stress peaks (with fixed-rate bonds at 13.04% or IPCA+ at 6.86%), your brokerage account balance opened higher. However, for those planning to allocate new capital now, nominal entry rates have decreased.
Currency Exposure: With the dollar touching R$ 5.01, the cost of dollarizing a portfolio has fallen. Although the immediate electoral premium has receded, defensive allocation in overseas assets remains recommended by managers as insurance against external shocks.
The retrenchment in the structural risk premium also tends to favor interest-sensitive assets on the stock exchange. Real estate, retail, and Small Cap companies tend to unlock value when the discount rate applied to future earnings declines over the long-term horizon.
Watch out for volatility until Sunday: The election race remains within the margin of error in polls such as BTG/Nexus (46.5% to 45.9%). Any swing in final polls or debate events could reverse the rate contraction just as quickly.
What to Monitor Until the Election Concludes?
The path of the yield curve for the rest of 2026 and early 2027 depends on Sunday's ballot results and the first signals regarding the composition of the president-elect's economic team. There are three decisive barometers to monitor throughout this week:
Final-stretch polls — Track whether the gap indicated by Real Time Big Data (52% to 48%) is confirmed by other pollsters or if the numbers return to the technical tie seen in the BTG/Nexus survey.
Support for the U.S. 10-year Treasury yield — The 5.10% level remains historically high. If U.S. yields break above this barrier, external pressure could cancel out domestic relief.
Commercial dollar level at R$ 5.00 — The psychological R$ 5.00 barrier attracts currency-hedging buy flows. Should the exchange rate break below this line, the relief in projected inflation could accelerate the tightening of intermediate DIs.
Until the votes are tallied, retail investors should treat strong mark-to-market moves with caution, avoiding extending durations excessively without liquidity at times when political volatility dictates daily prices.
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