Brazilian President Lula's unexpected re-election on Sunday triggered a sharp market reaction. On Monday, Brazil's benchmark stock index plunged 13.9%, its largest single-day drop since the pandemic; the Brazilian real fell nearly 8% against the US dollar, its biggest decline since 1999; and the 10-year government bond yield surged 2.46 percentage points, reaching a new high in over a decade. Markets are concerned that Lula's high-cost campaign promises will exacerbate fiscal pressure, leading the Brazilian Treasury to cancel two bond auctions this week. Analysts point out that Lula needs to walk a tightrope between fulfilling his promises and reassuring investors to avoid a fiscal crisis.