Traders still favour Lula to top the first round, by less

Polls call the race neck-and-neck, and Lula's odds of winning most votes fell 13 points this week

In one line: Lula tops today's first-round count by under five points, a narrow win the market prices at only 46%.

Brazilians vote today in the first round of a presidential race that three outlets on 3 Oct called neck-and-neck. The Guardian, Bluewin and the Venezuela Star all reported that Luiz Inácio Lula da Silva, the incumbent, and Flávio Bolsonaro stood level in the polls. CNBC reported the same day that Wall Street was bracing for two sharply different results.

Traders on Polymarket still make Lula the favourite to win most first-round votes, at 61%. That is down 13 points over the seven days from 74% on 27 Sep, and 17 points below the seven-day high of 78% on 2 Oct. The venue puts the fall over the last 24 hours at 13.5pp. Flávio Bolsonaro's contract in the same event stands at 39%. Traders give any candidate an outright first-round win, which would avoid a runoff, only 6%.

The price and the polls disagree less than the 61-39 split suggests. Lula winning the first round by under five points trades at 46%, and by five to ten points at 12%. Nearly all of Lula's chance rests on a narrow win. The price fell to its low of 59% on 3 Oct, the day the dead-heat reports ran, and has gained 2 points since. Traders took the tie seriously but did not read it as a lead for Flávio.

Lula finishes first in today's count, by under five points, an outcome the 46% on the narrow-margin contract underrates. If the polls showing a tie are right, any lead Lula takes will be thin, and most of his 61% should sit in the under-five-point band. The two contracts ask different questions, one about rank and one about margin, so this is a reading of the polls, not arithmetic. The case for Flávio is the 17-point slide in Lula's odds from the 2 Oct high: if late voters break his way, he tops the count. The call is wrong if the official count published by 5 Oct shows Flávio ahead, or Lula ahead by five points or more.

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