"Busiest Week Ever": Goldman's Trading Desk Sees Rush Into Brazil After Bolsonaro's First-Round Win
Brazil's general elections earlier this month sparked a right-wing wave at the polls. Though most polls forecast socialist President Luiz Inácio Lula da Silva narrowly leading in the first-round presidential race, right-wing Sen. Flávio Bolsonaro beat the unhinged leftist by around 2 percentage points.
Bolsonaro and Lula now head to an October 25 runoff, with the latest polls putting Bolsonaro ahead.
A PoderData/Aya survey released earlier today put Bolsonaro at 51% of valid votes and Lula at 49%, a statistical tie within the poll's 1.8-percentage-point margin of error. Bolsonaro's lead narrowed to 2 percentage points from 6 in the October 8 poll. The senator lost 2 points while Lula gained 2 points in the latest survey, conducted over the weekend.
A separate BTG Pactual/Nexus poll released today showed Bolsonaro ahead by a wider margin, with 52% of valid votes against Lula's 48%. That survey interviewed 2,002 voters over the same period and carries a margin of error of 2 percentage points.
Polymarket odds imply an 86.5% probability of a Bolsonaro victory in Brazil's presidential election, compared with 14% for Lula (as of early Tuesday morning).
Just over a week after Brazilian equities surged following Bolsonaro's first-round win, Goldman Sachs analysts have provided clients with a detailed breakdown of foreign inflows, highlighting how international investors are piling in for a Bolsonaro victory in the runoff.
Goldman's trading desk described last week as "the busiest week ever in Brazil following the unexpected lead of Flavio over Lula in the first round of the general elections."
One day after the first round, on Monday, the trading desk saw record trading volumes: "Trading volumes surged to US$8.7bn a day (Monday was a record of US$20bn traded on a regular session)."
Orange = 2026 Notl Traded (20DMA) Shaded Area = Min and Max of all the past 30yrs
Here's more color:
Price action was no different. EWZ moved +12.5% in a single day. This was a 5-sigma event (assuming gaussian distribution that would be a 1 in 3.5mn event).
But we know that is not the case. In fact, since EWZ inception in 2000, there have been 5 other instances of a 1 day move larger than >12.5%. Twice during the sharp recovering from the pandemic in 2020, and 3x during the recovery from the 2008 crisis. What is interesting now, is that it seems to be the first move of this order of magnitude not coming from a sharp sell-off.
The rally was driven by foreign inflow – Monday was the largest 1-day-inflow ever at US$2bn.
As you can imagine, our desk was faced with a wave of incomings, on "how do I trade", and "how far this can go". We've been seeing a lot of interest on our {GSBZRATE Index} and {GSBZRIGH Index}. Both have been outperforming Ibov and EWZ by >15% since election. GS was the largest net buyer of BZ listed names over the last 3 sessions, driven by the almost US$700mn demand for those custom baskets.
So, was that it? No, let me zoom out for you:
Medium- and long-term rates have already compressed 150bps over the last 2 weeks – the spread of BZ 10YR vs. US 10YR is now at around 7.2%. After 2020, it traded as low as 6.5% (-120bps), and the lows were at 4.8% (-240bps)
Historically for every 100bps compression of this spread EWZ price has increased by around 8.3%. (vs. GSBZRATE in USD at 11.2%). If rates do come down to recent lows, we could see EWZ trading between US$47.80/shr and US$52.20/shr
Fundamentally it does not seem to be extremely farfetched. EWZ EPS is running at ~US$4.4/shr, which would mean it trading at 11-12x if trading around US$50/shr. While this is significantly above screens, it is below the pre-2020 levels of 14x.
Bolsonaro faces four hurdles: win the runoff election later this month, assemble a credible economic team, propose a deliverable fiscal plan, and secure congressional support to enact it.
Last Thursday, Bolsonaro's momentum continued when he secured endorsements from four center-right parties, strengthening his coalition ahead of the October 25 runoff election against Lula.
"We can't be part of a lost generation," São Paulo Governor Tarcísio de Freitas told Bolsonaro at a Republicanos event late Wednesday.
Freitas added, "We have to deliver on the work that your father started."
Freitas described the nation-killing socialist policies of Lula and how a once-in-a-generation conservative sweep has shifted South America from left-wing to right-wing after years of economic despair under socialist rule. A Bolsonaro would cement the complete shift.
Also last week, UBS hosted Ideia Big Data on Tuesday, during which the consultancy firm assigned Bolsonaro an 85% probability of victory (read the note).
Tyler Durden Tue, 10/13/2026 - 13:55
Continue reading...
[ H/T ZeroHedge ]
Brazil's general elections earlier this month sparked a right-wing wave at the polls. Though most polls forecast socialist President Luiz Inácio Lula da Silva narrowly leading in the first-round presidential race, right-wing Sen. Flávio Bolsonaro beat the unhinged leftist by around 2 percentage points.
Bolsonaro and Lula now head to an October 25 runoff, with the latest polls putting Bolsonaro ahead.
A PoderData/Aya survey released earlier today put Bolsonaro at 51% of valid votes and Lula at 49%, a statistical tie within the poll's 1.8-percentage-point margin of error. Bolsonaro's lead narrowed to 2 percentage points from 6 in the October 8 poll. The senator lost 2 points while Lula gained 2 points in the latest survey, conducted over the weekend.
A separate BTG Pactual/Nexus poll released today showed Bolsonaro ahead by a wider margin, with 52% of valid votes against Lula's 48%. That survey interviewed 2,002 voters over the same period and carries a margin of error of 2 percentage points.
Polymarket odds imply an 86.5% probability of a Bolsonaro victory in Brazil's presidential election, compared with 14% for Lula (as of early Tuesday morning).
Just over a week after Brazilian equities surged following Bolsonaro's first-round win, Goldman Sachs analysts have provided clients with a detailed breakdown of foreign inflows, highlighting how international investors are piling in for a Bolsonaro victory in the runoff.
Goldman's trading desk described last week as "the busiest week ever in Brazil following the unexpected lead of Flavio over Lula in the first round of the general elections."
One day after the first round, on Monday, the trading desk saw record trading volumes: "Trading volumes surged to US$8.7bn a day (Monday was a record of US$20bn traded on a regular session)."
Orange = 2026 Notl Traded (20DMA) Shaded Area = Min and Max of all the past 30yrs
Here's more color:
Price action was no different. EWZ moved +12.5% in a single day. This was a 5-sigma event (assuming gaussian distribution that would be a 1 in 3.5mn event).
But we know that is not the case. In fact, since EWZ inception in 2000, there have been 5 other instances of a 1 day move larger than >12.5%. Twice during the sharp recovering from the pandemic in 2020, and 3x during the recovery from the 2008 crisis. What is interesting now, is that it seems to be the first move of this order of magnitude not coming from a sharp sell-off.
The rally was driven by foreign inflow – Monday was the largest 1-day-inflow ever at US$2bn.
As you can imagine, our desk was faced with a wave of incomings, on "how do I trade", and "how far this can go". We've been seeing a lot of interest on our {GSBZRATE Index} and {GSBZRIGH Index}. Both have been outperforming Ibov and EWZ by >15% since election. GS was the largest net buyer of BZ listed names over the last 3 sessions, driven by the almost US$700mn demand for those custom baskets.
So, was that it? No, let me zoom out for you:
Medium- and long-term rates have already compressed 150bps over the last 2 weeks – the spread of BZ 10YR vs. US 10YR is now at around 7.2%. After 2020, it traded as low as 6.5% (-120bps), and the lows were at 4.8% (-240bps)
Historically for every 100bps compression of this spread EWZ price has increased by around 8.3%. (vs. GSBZRATE in USD at 11.2%). If rates do come down to recent lows, we could see EWZ trading between US$47.80/shr and US$52.20/shr
Fundamentally it does not seem to be extremely farfetched. EWZ EPS is running at ~US$4.4/shr, which would mean it trading at 11-12x if trading around US$50/shr. While this is significantly above screens, it is below the pre-2020 levels of 14x.
Bolsonaro faces four hurdles: win the runoff election later this month, assemble a credible economic team, propose a deliverable fiscal plan, and secure congressional support to enact it.
Last Thursday, Bolsonaro's momentum continued when he secured endorsements from four center-right parties, strengthening his coalition ahead of the October 25 runoff election against Lula.
"We can't be part of a lost generation," São Paulo Governor Tarcísio de Freitas told Bolsonaro at a Republicanos event late Wednesday.
Freitas added, "We have to deliver on the work that your father started."
Freitas described the nation-killing socialist policies of Lula and how a once-in-a-generation conservative sweep has shifted South America from left-wing to right-wing after years of economic despair under socialist rule. A Bolsonaro would cement the complete shift.
Also last week, UBS hosted Ideia Big Data on Tuesday, during which the consultancy firm assigned Bolsonaro an 85% probability of victory (read the note).
Tyler Durden Tue, 10/13/2026 - 13:55
Continue reading...
[ H/T ZeroHedge ]
