The big election focus this weekend will be on Sunday, with the latest polling data showing right-wing Senator Flávio Bolsonaro and socialist President Luiz Inácio Lula da Silva are statistically tied. Polymarket, meanwhile, shows Bolsonaro with a wide lead.
Bloomberg reports that neither Bolsonaro nor Lula is expected to secure an outright victory in Sunday's first round of voting. This suggests that a second round on October 25 is highly possible.
For weeks, we've outlined that high volatility is expected in the Brazilian currency and stocks after this weekend's first round of voting.
Traders are increasingly positioning for former President Jair Bolsonaro's eldest son to beat the socialist. As we've pointed out, this could set up the next big squeeze.
So far, the election trade in Brazil is gathering steam: currency volatility is surging, bullish stock options have erupted, and Polymarket odds give Bolsonaro roughly a 55.6% chance of winning.
The Brazilian real's one-week implied volatility has jumped above 31%, its highest level since late 2022. That exceeds the one-month measure, which captures both voting rounds but remains below 25%, highlighting the extreme concentration of r
