Visão Turim for November: elections, fiscal risk and the path for rates

The November edition of Visão Turim brought together Fernando Verboonen (Partner and Co-CIO), Guilherme Ferraioli (Partner and Co-CIO), and Henrique Santos (Partner and Head Portfolio Manager) to discuss developments following the Brazilian elections, fiscal challenges and their impact on inflation, interest rates, and economic activity, as well as the outlook for U.S. monetary policy and global markets.

Highlights:

• Global scenario: The U.S. economy continues to be supported by the strong cycle of investment in artificial intelligence, despite uncertainties surrounding financing costs. Equity markets have undergone a correction, particularly among semiconductor-related companies, but earnings growth continues to provide support to stock markets.

• United States: Following the September rate hike, the Fed kept interest rates unchanged in October, with the Fed Chair acknowledging the effects of restrictive monetary policy on economic activity. Markets continue to price in another rate hike in December. On the political front, the Democrats’ victory in both chambers of Congress in the midterm elections is expected to make it more difficult for the administration to advance its legislative agenda. Even so, the majority secured is insufficient to override presidential vetoes. A conviction of the president in a potential impeachment trial would also require a two-thirds majority in the Senate.

• Brazil: The deterioration in the fiscal outlook and the depreciation of the Brazilian real have pushed inflation expectations higher, reducing the scope for further interest rate cuts. In addition, the high share of household income committed to debt payments, tighter credit conditions, and signs of a cooling labor market are increasing downside risks to economic growth in 2027.

• Markets: Following the second-round election results, which confirmed the president’s reelection, major Brazilian risk assets underwent a sharp repricing, with the real depreciating, equities declining, and interest rates rising. Against this backdrop, the appointment of the economic team and the announcement of fiscal measures for the new term are expected to be key to restoring confidence and shaping market developments in the coming months.

 

FAQ

What did the November 2026 Visão Turim cover?

How Brazil’s elections affect the fiscal outlook, inflation and interest rates, the path for US monetary policy, and the behaviour of global markets.

 

What is the outlook for interest rates in Brazil after the elections?

A weaker fiscal picture and currency depreciation lifted inflation expectations and narrowed the room for further rate cuts.

 

What to expect from US monetary policy?

After holding rates steady in October, the Fed signalled a possible moderation in the cycle, with the market still weighing its next move in December.

 

How did the election results affect Brazilian assets?

The runoff triggered a sharp repricing, with a weaker real, a falling equity market and higher risk premiums.