Anti-establishment candidate Jair Bolsonaro prevailed as expected in Brazil’s presidential election on 28 October, having run on a socially conservative “more Brazil, less Brasilia” platform. This included promises to reduce corruption, increase security, allow gun ownership and oppose the legalization of abortion. It was the first time since 2002 that Brazil’s Workers’ Party (PT) did not win the presidency.

Details on President-elect Bolsonaro’s macroeconomic policy plans remain to be seen but are expected to focus on reducing government inefficiency and state intervention in the economy, while keeping state control over more strategic industries. His acceptance speech was constructive and business friendly, emphasizing the importance of private property and individual freedom. In particular, he plans to focus on employment, income and reining in Brazil’s fiscal deficit to curtail increasing debt ratios.

Brazil’s markets rallied for some time before the election, particularly after the first round on 7 October, as uncertainty over the outcome declined. The markets also responded positively to the second round results on 29 October: Local yields rallied by 10 to 15 basis points and credit spreads tightened three to five basis points. Meanwhile the Brazilian real, which strengthened initially, weakened as investors took profits and emerging market currencies declined in general.