Brazil markets price Bolsonaro win; hedge against Lula victory cheapens

After the first round of Brazil's presidential election, markets moved sharply to price a Bolsonaro victory as the base case, with the dollar falling 4.12% and the Ibovespa hitting a record high. The desk notes that with the market pricing one outcome, protection against the other (Lula win) has become cheap, presenting a tactical opportunity ahead of the second round on October 25. The shift reflects a rapid repricing from electoral premium to a main scenario regime, but the outcome remains uncertain.