The real gained about 1% on Tuesday and interest-rate futures eased after the Treasury cancelled its bond auctions for the week. The Ibovespa gave up an early gain and closed 0.5% lower.
Macro | FinancialMarkets.com | October 28, 2026
Tickers: EWZ, BRL, SAN, ITUB
Brazil's government has calmed part of its market. Tuesday's close showed which part.
The dollar fell 0.97% to 5.34 reais on Tuesday, recovering some of Monday's surge, which local outlets described as the largest one-day rise since 1999. Interest-rate futures also eased, correcting part of Monday's jump. The Ibovespa, after trading up as much as 1.08%, closed down 0.50% at 175,710.
What the Treasury did
The calm in currency and rates followed supply relief. The National Treasury cancelled all of its domestic bond auctions this week, including Tuesday's inflation-linked NTN-B sale and Thursday's fixed-rate LTN and NTN-F sale, and has bought back bonds: more than R$14 billion of fixed-rate and inflation-linked notes on Monday, with a further inflation-linked buyback announced on Tuesday. When the government stops selling bonds into a falling market, prices tend to stabilize, at least for a while.
Monday's moves followed President Lula's victory in Sunday's runoff, with investors questioning the fiscal outlook. The government has said fiscal measures are ready but has not published them.
Why stocks lagged
Liquidity measures help bond and currency markets directly. They do little for the earnings of Brazilian companies or for the risk premium investors demand to own them. The stock market's failure to hold its morning gain suggests equity investors want to see the fiscal package, not just a pause in issuance.
There was a reminder of the exposure on Wednesday morning in Madrid. Santander, whose Brazilian unit is one of its largest businesses, reported lower profit in Brazil for the third quarter, and its shares fell about 3.4% in early trading. They had fallen 3% on Monday after the election.
Reading the split
One reading is that the backstop is working. The real and rate futures retraced part of Monday's move within a day, and cancelling auctions removes the most immediate source of pressure.
The other is that the market is waiting for policy. Auction cancellations buy time but do not change the fiscal path, equities did not join the recovery, and the government's measures remain unpublished. If they disappoint, the Treasury will have to return to the market with less room.
What to watch
Publication of the government's fiscal measures, the size and acceptance of the Treasury's bond buybacks, next week's auction calendar, and whether the Ibovespa recovers any of Monday's decline.