🔆 BUYSIDEBRAZIL | WEEKLY REPORT Brazil’s elections enter the final stretch as a weaker U.S. labor market marks the week – 02/10
✅ In Brazil, the final stretch of the electoral race dominated attention throughout the week. The latest polls continue to point to a tight race between Lula and Flávio Bolsonaro, with Lula maintaining a lead in the first round but failing to gain consistent momentum in the final days of the campaign. In potential runoff scenarios, the race remains even tighter. Against this backdrop, the first-round result, particularly the margin between the two candidates, will be important for markets’ reassessment of the electoral outlook at the beginning of next week.
âś… On the domestic macroeconomic front, the labor market continued to show resilience, although broader indicators point to some moderation. August Caged data surprised to the upside, with 165.8 thousand net formal jobs created, but cumulative net job creation between January and August remains around 25% below the level recorded over the same period in 2025. The PNAD survey also continued to point to a resilient labor market, with the unemployment rate broadly stable at 5.3%, while income dynamics remain more moderate than at the beginning of the year. Taken together, the data remain consistent with a gradual slowdown in economic activity over the second half of the year.
✅ In the United States, this week’s data pointed to still-resilient activity, while inflation and the labor market showed signs of moderation at the margin. Second-quarter GDP was revised higher, while August PCE came in below expectations. In the labor market, payrolls reinforced the weaker picture, with only 29 thousand jobs added, downward revisions to previous months, a higher unemployment rate, and slower wage growth. The combination of weaker employment momentum and moderating inflation has reduced the perceived need for an immediate additional tightening, while resilient economic activity continues to support a cautious stance from the Fed. We therefore maintain our expectation that the FOMC will leave interest rates unchanged in October.
