Brazilian bonds post best pre-election appreciation since 2013; CDS ticks up

Brazilian sovereign bonds have appreciated sharply in September, marking the strongest pre-election performance since 2013, though the five-year CDS rose in the last week, signaling some residual risk aversion. The divergence suggests investors are pricing improved fiscal prospects but remain cautious ahead of the election. This matters as it reflects market sentiment on Brazil's creditworthiness and potential policy direction.