Brazil’s Coronavirus Splurge Is Sparking a Rebellion in Markets

Brazil’s coronavirus aid outpaces the U.K., New Zealand
Investors anxiously watching debt levels and a 12% budget gap

BRASILIA, BRAZIL - FEBRUARY 20: President of Brazil Jair Bolsonaro talks with Brazil's Economy Minister Paulo Guedes during the "Ceremony of the New Housing Credit Program" at the Planalto Palace on February 20, 2020 in Brasilia, Brazil. (Photo by Andressa Anholete/Getty Images)Photographer: Andressa Anholete/Getty Images South America

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By Martha Beck and Andrew Rosati

October 27, 2020 at 11:00 AM UTC

Updated on

October 27, 2020 at 2:46 PM UTC

This article is for subscribers only.

President Jair Bolsonaro’s stimulus spending spree won praise far and wide for saving Brazilians from the worst of the pandemic’s economic pain.

But now, as the worst of the health crisis eases, anxiety is mounting in financial circles about how he’s going to pay for it. Investors have been unloading the currency and stocks, sparking routs that are almost unparalleled in the world this year, and they’re increasingly refusing to buy anything but the shortest of short-term government bonds.