Economy

Brazil’s Election Shows How Prediction Markets Can Deceive

Before Brazil’s presidential vote on Sunday, Polymarket and Kalshi both implied roughly 4-in-5 odds that conservative candidate Flávio Bolsonaro would defeat left-leaning incumbent Luiz Inácio Lula da Silva, which the stock and bond markets interpreted as a potentially positive development for the country’s fiscal sustainability and broader economy. The Brazilian currency and benchmark Ibovespa stock index rallied in the runup to the vote in what may be the biggest misreading of an election ou