Gustavo Ber, Economist at the Ver Study
According to Gustavo Ber, this Monday the risk-off climate deepens on Wall Street, given the escalation in rates and waiting for the Fed’s reaction after the latest inflation data, before which domestic assets accompany the external weakness, to which are added local political and economic tensions.
“So the S&P Merval has lost 2% so far, due to the weakness exhibited by the main ADRs, which are dragged down by the climate of global risk aversion and so premature bets on the “ electoral trade” are already evaporated”he claimed.
But in addition, he assured that he also The sharp declines among bonds spread, this time with average declines of 2% in their prices in dollars among the main references, with a country risk already close to 2,100 bp., given that caution grows due to external and internal noise, and the penalized parities and the “step up” in the coupons no longer cushion the unfavorable technical position.
Ber said that “the recent tensions on the CER titles do not contribute either, with disarming of positions and jumps in yields, which could anticipate difficulties in the next auctions, where challenging levels of “roll-over” will have to be managed – given a profile of concentrates short-term maturities – in order to avoid incurring in greater monetary financing”.
For the expert, with numerous economic challenges ahead to be managed, and an unconstructive political climate in the background, the risks are growing that the imbalances will worsen beyond the goals committed to with the IMF. “Faced with a pace of purchases that has not managed to rise, not only is discounting that it would not be possible to meet the goal of accumulation of reserves, but also growing difficulties in the exchange balance as of the second semester.”
Faced with these concerns, added to the noise about the CER titles, the financial dollars have woken up and so they rehearse a rapid upward rearrangement in the last wheels, since they could also not continue “ironing” over time under a scenario of high inflation, given that, like the wholesaler, they are incubating growing relative backwardness.
Javier Timerman, Adcap Financial Group
“It is impossible for a single factor to explain the rise in country risk and the collapse of bonds, there are several. Argentina, after the restructuring of its debt, lost the ability to finance itself in dollars in the foreign market and the only source of genuine financing was left to borrow in pesos in the local market”, Javier Timerman said.
“As there are expectations of inflation and devaluation, the market began to buy debt and finance the government in bonds that are mainly tied to inflation and, to a lesser extent, in bonds tied to the dollar.”he added to Radio Metro.
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Telam
In this line, he commented that, as the demand for inflation-linked bonds “grew a lot, because it was the safest in terms of investment, the market bought a lot of CER debt and the Government began to borrow practically only in this type of bonds “, while adding: “That’s where the market’s questions about a possible devaluation or re-profiling appeared.”
He also pointed out that in Argentina, inflation-linked bonds “were trading at inflation+20% on Thursday. So, what there is in the country is a crisis of confidence about what can happen with these bonds.” “In short, the catalysts for all this were doubts, uncertainties. And the market then began to undo those positions,” he concluded.
Martin Guzman, Minister of Economy
Last week Martín Guzmán criticized the “great irresponsibility” opposition sectors to circulate versions of a possible default, while ratifying the Government’s decision to “strengthen the public debt market in pesos”. And this Monday the Minister of Economy assured that the Government of Alberto Fernández “Never” would default the debt in pesos, given rumors of a potential reshaping of inflation-indexed bond maturities.
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“And as for the barbarity of defaulting debt in pesos: our government would never do that. Credit in its own currency is a pillar of every sovereign state,” said the head of the Palacio de Hacienda on the social network Twitter.
Guzmán expressed these concepts 24 hours before an auction of inflation-adjusted bonds, for $14,000 million nominalin what will be a test on the state of mind of investors with the Government.
This Tuesday the Ministry of Economy will put out to tender five debt securities in pesos, one of them exclusive for the Common Investment Funds, in an offer that includes fixed-rate bonds, with others adjusted for price variations. The reception of offers will begin at 10 a.m. on Tuesday and will last until 3 p.m.
The title that can be subscribed only by Common Investment Funds is a Discounted Liquidity Bill maturing on July 15. Then four bills that make up the Market Makers Program will be tendered, two of them at a discount, one due on August 31, and another on November 30.
Two more will be added to these offers, adjusted by CER (inflation) also at a discount, one payable on October 21, and the other on December 16, all within this year.
Last week, the main financial instruments that the Argentine State has fell by up to 10% of their value, wrapped in versions that would indicate that, in the face of a change in the political sign of the Government, there could be a postponement of payments. The Casa Rosada emphatically denied it.
Source: Ambito
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