Brazil’s 10-Year government bond yield fell to around 14.24%, approaching the three-month low of 14.13% reached on September 8, after annual inflation eased to 4.22% in August 2026 from 4.44% in July. The reading was below the 4.27% forecast and remained within the BCB’s 1.50% to 4.50% target range, strengthening expectations that policymakers will lower the Selic by a further 25 basis points at next week’s Copom meeting. The Brazilian real had earlier strengthened to around 5.08 per US dollar in September as high domestic rates supported foreign demand for fixed-income assets and softer inflation reduced the risk premium. Flávio Bolsonaro’s advances in presidential-race polls have also been viewed positively by markets because investors regard him as fiscally restrictive. Elevated domestic borrowing costs and weak business activity continue to weigh on the economic outlook, while an escalating dispute between Supreme Court justices Alexandre de Moraes, seen as a Lula ally, and André Mendonça has developed into an institutional crisis.