Brazil’s 10-Year government bond yield fell to around 14.24%, nearing a three-month low of 14.13% touched on September 8th, following lower-than-expected inflation data. Brazil’s annual inflation rate eased to 4.22% in August 2026 from 4.44% in July, slightly below forecasts of 4.27% and moving further within the central bank’s target range of 1.50%-4.50%. The data strengthened expectations that the BCB will cut the Selic by another 25 basis points at next week’s Copom meeting. Meanwhile, recent polls have shown Flavio Bolsonaro gaining ground in the presidential race. Markets view Bolsonaro as more fiscally restrictive, while elevated domestic yields and weak business activity continue to weigh on the economic outlook. The move gained further momentum as the intensification of a dispute between Supreme Court justices Alexandre de Moraes, seen as a Lula ally, and Andre Mendonca has escalated into an institutional crisis.