Elections and Risk Premiums: The Impact of the Presidential Agenda on the Economy

Deepening the analysis of causes and systemic risks, it is observed that inflation measured by the IPCA accumulated over twelve months stalled at 4.44%, remaining within the official target, but accompanied by a short-term variation of +4.23% compared to the 4.26% level observed seven days ago, against a drop of 4.31% in the thirty-day comparison. This inflation behavior, added to the high level of the Selic rate fixed at 14.00% per year, whose seven- and thirty-day trend remains unchanged at 0.0%, demonstrates that contractionary monetary policy acts as a shock absorber, but is not enough to neutralize the volatility generated by the electoral dispute. The main risk for variable income assets lies in regulatory uncertainty affecting strategic sectors such as infrastructure, energy, and sanitation, whose long-term investments depend directly on the legal security promised by candidates.

Projecting scenarios for upcoming periods, on the thirty-day horizon, the probability is high that the risk premium will continue dictating exchange rate volatility, with the dollar fluctuating sharply as new voting intention polls are published. In ninety days, the scenario points to a consolidation of political alliances and greater clarity on the economic plans of the main competitors, which may ease stress in interest rate futures contracts and corporate discount rates. On the one-day-to-one-hundred-and-eighty-day horizon, the Brazilian market should be focused on the governmental transition and the composition of the economic team, determining whether there will be convergence toward fiscal responsibility or if the country will face a prolonged cycle of contraction in productive investments.

For individual retail investors, the practical recommendation is based on applying the tradition of value and the uncompromising search for a margin of safety. In moments of strong political turbulence, the investor...