Economics

Brazil’s Markets Sink as Spending Push Imperils Lula’s Honeymoon With Investors

Incoming government’s lack of clear fiscal plan causing worry
Faster-than-expected domestic inflation adds to negative mood

Luiz Inacio Lula da Silva, Brazil's president-elect, center, poses for a photograph after winning the runoff presidential election in Sao Paulo, Brazil, on Sunday, Oct. 30, 2022. Lula won election as Brazil’s president in a dramatic comeback for the left-wing politician who was languishing in a jail cell just three years ago on corruption charges.Photographer: Tuane Fernandes/Bloomberg

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By Vinicius Andrade and Davison Santana

November 10, 2022 at 1:16 PM UTC

Updated on

November 10, 2022 at 9:19 PM UTC

This article is for subscribers only.

Brazil’s currency and stocks sank and swap rates jumped as investors grew increasingly concerned that President-elect Luiz Inacio Lula da Silva’s plans to boost spending will swell budget deficits and undermine fiscal accounts.

The real fell 3.4% on Thursday, its worst day since April, erasing all the gains since the presidential runoff vote on Oct. 30. The benchmark Ibovespa equity index dropped 3.3% and long-end swap rates rose more than 100 basis points. The declines are some of the worst in the world, bucking a global rally.