Yields on Tesouro Direto government bonds opened lower on Monday (9) in the first trading session following President Lula's nationwide address on Sunday evening—a genuine relief, but one disproportionately small compared to the shock the market has accumulated since the reelection.
7.92% → 7.75%: The 2032 IPCA+ Trajectory Over Two Weeksfrom 11/05 to the 11/09 session, according to InfoMoney
Why Did Treasury Yields Fall Today?
Because Lula delivered a nationwide address on Sunday (11/8) reaffirming the administration's commitment to fiscal responsibility. In the first trading session after the speech, the 2032 IPCA+ opened at IPCA + 7.75% per year—7 basis points lower than Friday's close of 7.82%, according to InfoMoney. Fixed-rate yields fell between 2 and 3 basis points, with the 2032 Treasury Fixed-Rate opening at 15.08%.
The speech followed a week of policy signals. On Wednesday (4), Copom, Brazil's rate-setting committee, kept the Selic benchmark interest rate at 13.75%, without indicating future cuts. On Friday (6), Lula attended a meeting of the National Energy Policy Council (CNPE) and stated that "no one in this country can talk more about fiscal responsibility than my economic team," according to NDMais. On Sunday, he repeated the tone on national television, this time to 220 million Brazilians.
The problem is what he did not say. Without spending-cut proposals, a fiscal target figure, or a reform timeline, the market received the speech as an intention rather than a plan. Promises made in the same address included free public transit on weekends, expansion of the Pé-de-Meia university savings program, and the elimination of taxes on the basic food basket—measures with a fiscal impact running counter to the signal given.
| Bond | Fri. Close 11/06 | Mon. Open 11/09 | Change |
|---|---|---|---|
| Tesouro Prefixado 2029 | ~14.74% | 14.71% | −0.03 p.p. |
| Tesouro Prefixado 2032 | ~15.11% | 15.08% | −0.03 p.p. |
| Tesouro IPCA+ 2032 | 7.82% | 7.75% | −0.07 p.p. |
| Tesouro IPCA+ 2040 | ~7.52% | 7.45% | −0.07 p.p. |
| Tesouro IPCA+ 2050 | ~7.44% | 7.37% | −0.07 p.p. |
11/09 opening and change: InfoMoney. Friday closes estimated from the reported 7-basis-point and 2-to-3-basis-point moves.
Where the Shock Came From: The Trajectory Since the Reelection
The starting point is the night of October 25, when Lula's runoff victory was confirmed. The market had priced in a preference for the opposition candidate, and the reversal triggered an immediate shock to interest rates: the 2032 Treasury Fixed-Rate opened the following trading session (10/26) at 15.78% per year—an all-time high, surpassing the peaks of March 2020, according to InfoMoney. The move was so extreme that Tesouro Direto was forced to close for an entire day due to extreme volatility.
In the following days, the 2032 IPCA+ continued to climb, reaching 7.92% on the morning of November 5, when news that Lula would summon economists to discuss public debt caused yields to reverse course. Since then, the trajectory has been a gradual decline—the opposite dynamic of what occurred right after the first round of voting, when yields plunged 1.28 percentage points in the first trading session.
The math for the period (estimated from available data): the 2032 Fixed-Rate has fallen roughly 70 basis points from its intraday peak of 15.78%, while the 2032 IPCA+ has retreated 17 basis points from its 7.92% high. In price terms, this represents capital gains for anyone who bought at the peaks—but yields remain far from pre-election levels, when long-term IPCA+ bonds traded below 7%.
Why Economists Are Skeptical About the Relief
The ceiling on this relief is clear. Sérgio Vale, chief economist at MB Associados, stated that "99% of the speech leaned toward increased spending"—an assessment that encapsulates the core tension: Lula signaled responsible fiscal intentions with one hand while promising expanded benefits with the other. Roberto Troster, former chief economist at Febraban, noted a lack of concrete direction, such as the creation of a working group on the debt.
The Focus Bulletin released this Monday (9) reinforces this skepticism. Projections raised the expected Selic rate for the end of 2026 from 13.50% to 13.75%—the same level at which Copom maintained the rate last week, signaling that the market has abandoned any expectation of a rate cut this year. The inflation estimate for 2027 also rose, from 4.76% to 4.90%. In either case, the outlook is for high interest rates for longer.
The international comparison Lula used—that Brazil's gross debt (82.9% of GDP, according to the Central Bank) is lower than that of the U.S., France, or Japan—failed to convince analysts. Economists point out that the comparison ignores interest-rate structures, debt composition, and the risk premium Brazil carries. JPMorgan, which downgraded its recommendation on the Brazilian real and sovereign bonds in October, had not revised its stance as of publication.
What This Means for Tesouro Direto Investors
Investors who bought long-term IPCA+ bonds before the election are holding positions with negative mark-to-market values. Those who entered during October's peaks are already seeing some capital gains. For those still on the sidelines, current conditions still offer historically elevated yields—but volatility will remain high until the government establishes a concrete fiscal anchor.
Today's decline does not erase the shock of the post-election period. Investors who bought before the shock still carry paper losses; those who entered at the peaks have modest gains. For investors considering entering now, yields remain historically rare, but volatility will stay elevated until concrete fiscal measures are implemented. Selling now and locking in losses at the worst possible point is the most common mistake in this type of market move. Maintaining or expanding positions in long-term IPCA+ bonds makes sense for investors with at least a 3-year horizon who can tolerate mark-to-market volatility along the way.
We have previously detailed how to calibrate allocations, entry criteria by duration, and risk-profile adjustments in Tesouro Direto Investing Amid Volatility Following Lula's Reelection. Upcoming events that could move yields in either direction include:
Copom Meeting Minutes (11/10) — if the central bank adopts a harsher tone on inflation, long-term yields could climb back up; if it softens, today's move gains traction.
October IPCA Inflation — Focus projects 4.90% for 2027 inflation; a higher-than-expected result would pressure IPCA+ bonds further and invalidate today's relief.
2027 Budget Vote — any sign of fiscal expansion approved by Congress would undo the effect of Sunday's speech within hours.
Next Copom Meeting (December 8 and 9) — maintaining the rate at 13.75% with a hawkish signal would hurt medium-term fixed-rate and IPCA+ bonds; a neutral signal would consolidate the current pullback.