There is growing investor pessimism that Brazilian President-elect Luiz Inacio Lula da Silva will govern with fiscal discipline as the country's central bank chief likened a market selloff to a 'Liz Truss moment for Brazil.'
Brazil's former President Luiz Inacio Lula da Silva gestures as he speaks during a news conference in Sao Bernardo do Campo near Sao Paulo, Brazil March 10, 2021. REUTERS/Amanda Perobelli
Despite those gains, jitters remained, with investors calling for Lula to restore firm rules for public spending after major outlays by outgoing President Jair Bolsonaro during the pandemic and election campaign. "The market seemed to have convinced itself that Lula would be fiscally orthodox. The most recent news now casts doubt on this hypothesis," Dirk Willer, Citi Research's head of emerging markets strategy, wrote on Thursday night., said on Friday that a balance needed to be struck between social spending and putting public finances in order.
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