The yield on Brazil’s 10-year government bond rose to 14.3% in mid-May, close to the highest in one year amid rising political and inflation concerns. Markets reacted to reports alleging ties between Senator Flavio Bolsonaro, a contender in Brazil’s October presidential election, and Daniel Vorcaro, owner of failed lender Banco Master, who was charged with fraud. Investors assessed that the allegations could weaken Flavio Bolsonaro’s candidacy, currently viewed as President Luiz Inacio Lula da Silva’s main challenger. Vorcaro was jailed in March, accused of bribing a former central bank director. Meanwhile, inflation risks continued to support expectations of elevated interest rates. In its latest meeting minutes, the Central Bank of Brazil highlighted persistent inflationary pressures, as the Middle East conflict lifted energy costs and threatened to spread price pressures across the broader economy.