Tesouro Direto yields have experienced a historic three-day roller coaster since Lula’s reelection: the 2032 Fixed-Rate bond jumped from 12.89% to 15.50% in the first trading session after the election—the largest daily shock since the program's inception in 2004—before retreating 49 basis points on Tuesday and facing renewed pressure on Wednesday. For fresh capital, specialists interviewed by InfoMoney point to Tesouro Selic; for investors already holding long-term bonds, the guidance is to hold tight and avoid impulsive decisions.
What Happened to Tesouro Direto After the Reelection?
Three days in three acts. Lula’s reelection, confirmed on Sunday (October 25), triggered the largest interest rate shock in Tesouro Direto history during Monday's trading session (October 26)—surpassing in magnitude the spike recorded on March 12, 2020, at the height of the COVID-19 pandemic. The 2032 Fixed-Rate bond surged from 12.89% to 15.50% in a single day. In response, the National Treasury canceled its regular weekly auctions, executed emergency buybacks, and temporarily suspended trading for fixed-rate and IPCA+-linked bonds for several hours.
What surprised observers was not just the magnitude, but the velocity of the swings. The first day's shock did not have a single cause—it had three simultaneous drivers, each fueling the next. Even before the election, Fitch had already warned about the trajectory of Brazil's public debt, prompting the market to demand a higher risk premium. The election result simply accelerated what was already primed to happen.
Why Are Yields Still Fluctuating?
Three vectors converged within a matter of hours—and two of them remain active as of Wednesday.
The first vector was electoral: the market priced in the risk of a second term marked by spending expansion and the absence of a fiscal constitutional amendment (PEC) featuring concrete structural spending cuts in the days following the election outcome. The second vector materialized when this adjustment failed to be clearly signaled. The third emerged on Wednesday: newspaper *O Globo* reported that the economic team is studying the reinstatement of the IOF financial transactions tax on LCI, LCA, CRI, CRA, and incentivized debentures—instruments currently exempt from income tax that directly compete with Treasury bonds. If the IOF tax moves forward, capital could migrate from those investments into government securities, which could compress yields. However, the mere signal of yet another rule change in the fixed-income market was enough to apply upward pressure.
Important: as of press time, the Ministry of Finance has not confirmed any tax rates or an effective date. It is a study, not a final decision. That did not stop the Ibovespa benchmark stock index from falling 2.78% by midday while the market also awaited the Federal Reserve's decision—which kept U.S. interest rates in the 3.75% to 4.00% range, in line with expectations, without adding external pressure to the domestic picture.
What Should Investors Do With Their Money Now?
Specialists interviewed by InfoMoney diverge on the right timing to enter fixed-rate bonds, but converge on two points: new capital should go into Tesouro Selic while fiscal uncertainty remains unresolved, and no investor should act on impulse during a week of historic highs.
A safe harbor for new money. It does not fluctuate with mark-to-market pricing, guarantees daily liquidity, and yields approximately three times the trailing 12-month inflation rate. Recommended by XP Research and Bruno Corano (Corano Capital) while the fiscal outlook remains cloudy.
Historically high real yield with inflation protection. XP Research prioritizes the 2032 and 2035 maturities; suggests gradual entry in tranches to dilute timing risk in a still-volatile environment.
Yields are at an attractive level, but volatility remains high. Suited only for investors who do not need the cash before maturity and can tolerate statement fluctuations during turbulence.
"With the Selic rate at 13.75% per year—roughly three times the cumulative inflation over the past 12 months—investors are very well compensated to wait."Bruno Corano, CEO of Corano Capital, speaking to InfoMoney
For investors choosing the IPCA+ bonds, the site's real inflation tool helps clarify how much of the contracted return actually exceeds IPCA inflation—the most direct gauge for determining whether the bond's premium justifies its duration.
Current Bondholders: Sell or Hold?
The standard answer is to hold—but the practical answer depends on when you need the cash. Tesouro Direto uses mark-to-market accounting: bond prices fluctuate daily based on interest rate movements. When yields rise (as they did this week), prices fall, resulting in lower or negative short-term returns on account statements. This does not mean a permanent loss: investors who hold the bond until maturity receive the exact contracted yield, regardless of intervening market swings.
The chart illustrates what headlines sometimes obscure: a significant portion of the shock has already been reversed. Monday's historic peak was partially retraced on Tuesday; Wednesday brought renewed pressure, but yields remain below that peak. Investors who bought the 2032 Fixed-Rate bond prior to the election are seeing mark-to-market losses while yields remain above their contracted purchase price, but selling now locks in the worst possible moment. The National Treasury even repurchased 15 million fixed-rate bonds to help stabilize the market—a sign of how abnormal the volatility was.
What Lies Ahead?
The speed at which fiscal policy takes shape over the coming weeks will dictate long-term bond pricing. Copom, the central bank's rate-setting committee, is scheduled to meet on November 4; prior to this week's crisis, the market projected the Selic rate ending 2026 at 13.25%. Two paths are on the table.
The government submits a constitutional amendment (PEC) featuring concrete structural spending cuts during 2026 → fixed-rate and IPCA+ bonds appreciate, and investors who bought at historical yields may achieve capital gains before maturity.
Spending expansion persists, the IOF tax on tax-exempt assets advances without offsets, and Copom signals a resumption of rate hikes → long-term bonds remain volatile, confirming Tesouro Selic as the most conservative strategy for new capital.
If you hold Tesouro Selic, nothing changes: prices do not fluctuate and returns continue accumulating at the Selic rate. If you hold fixed-rate or IPCA+ bonds purchased before this week, your statement loss is still purely mark-to-market—selling now locks in the worst timing; holding to maturity secures your contracted yield. For new capital: Tesouro Selic while fiscal uncertainty remains unresolved is the unanimous recommendation, while IPCA+ bonds maturing in 2032 or 2035 can be added gradually in tranches for investors with a long-term horizon who can tolerate volatility along the way.
November 4 Copom meeting — if the central bank maintains the Selic rate accompanied by a tougher-than-expected statement, the market will interpret that policymakers also view fiscal risk as elevated; if the decision is neutral, it could signal market accommodation.
Fiscal PEC — any legislative proposal featuring specific structural spending cut figures and timelines will flatten part of the long-term yield curve; without concrete numbers, pressure on IPCA+ and long-term fixed-rate bonds will persist.
IOF tax decree on tax-exempt instruments — if published, LCI and LCA assets will lose competitiveness, increasing demand for Tesouro IPCA+ and potentially compressing yields on shorter-term bonds. Keep an eye out for any official gazette publications.
