BRAZIL: Bolsonaro Unlikely to Back Freitas as Candidate in 2026 Election: BBG
Bloomberg report that the odds that Brazil’s Jair Bolsonaro will back Tarcisio de Freitas as a candidate in next year’s presidential election are fading, according to his allies, a blow to investors who see the Sao Paulo governor as the ideal challenger to Luiz Inacio Lula da Silva. Bolsonaro instead appears to be leaning toward eventually throwing his weight behind a member of his family, Bloomberg add.
- USDBRL briefly spiked above the morning's highs on the story, though gains have since moderated. The move from Bolsonaro would come as a blow to Freitas who has emerged as a favourite of Brazilian business elites. Bloomberg describe his proposed policies as "market-friendly" and note that "he needs Bolsonaro’s support to wage a serious challenge to Lula".
- Overall, USDBRL still remains within close proximity to July's cycle low of 5.4027. Last week's high of 5.6301 provides initial resistance.
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STIR: Projected Rate Cuts Steady to Pre-Minutes Levels
- Projected rate cut pricing has gained momentum vs morning (*) levels: Jul'25 at -1.7bp (-1.2bp), Sep'25 at -18.6bp (-17.3bp), Oct'25 at -33.7bp (-31.7bp), Dec'25 at 52bp (-49.3bp).
US TSYS: Update: Post June FOMC Minutes React
- Treasury futures extending session highs after June FOMC minutes released - Tsy Sep'25 10Y futures currently trade +15.5 at 111-08.5 (110-23.5L / 111-08.5H), resistance to watch is at 111-28, the Jul 3 high.
- Curves mixed: 2s10s -2.429 at 48.025; 5s30s +0.555 at 95.738.
- USD inching lower, Bbg index BBDXY -0.20 at 1196.44; US stocks firmer but off early session highs: SPX eminis +25.75 at 6297.75
US: Voters Response To OBBB Sets Up Challenging Midterm Elections For GOP
A new survey from YouGov has found that 53% of Americans strongly or somewhat oppose the GOP’s Big Beautiful Bill, with 35% supporting it. YouGov notes: “Opposition to the budget has risen 10 percentage points since we first asked about it in April of this year.”
- YouGov notes: “52% of Americans — including 80% of Democrats and 22% of Republicans — believe the federal budget deficit will increase as a result of Trump's budget; 11% think it will remain the same and 19% think it will decrease
- “Very few Americans support reducing or eliminating funding for four social services asked about: Social Security, Medicare, Medicaid, and SNAP … Majorities want funding to be increased for Social Security (61%) and Medicare (56%), and sizable shares do as well for Medicaid (49%) and SNAP (41%)”
- The survey highlights the political challenge for Republicans ahead of the 2026 midterm elections. While the bill's passage is a major win for the Trump administration, it appears to open the door for a Democrat messaging campaign centred on cuts to safety net programmes.
Figure 1: “Thinking about the following U.S. program, do you believe it should be given more or less funding? (% who say each program should be given...)”
Source: YouGov
