Brazil’s 10-year government bond yield fell to around 12.68% in October, reaching a two-year low amid a rally in domestic assets driven by the election outlook. The first voting-intention polls released after the first round confirmed Senator Flávio Bolsonaro’s lead over President Lula in the runoff scheduled for October 25th, although some results remained within a statistical tie. Markets view Bolsonaro as more fiscally restrictive, and his lead strengthened expectations that a potential administration could tighten control over public spending and take steps to improve Brazil’s fiscal position. Lower pressure on public finances could reduce the risk premium demanded by investors, while tighter fiscal policy could ease inflationary pressures, potentially allowing the Central Bank of Brazil to cut interest rates more quickly.