Pre-election time is over. It is a political ban, the other one has been around for a long time. There are just over 48 hours left and it will be known the truth of the Primaries (STEP).
Next Monday another story will begin. But, precisely, on the trading desks, the question that hovers is what happens if the STEPs do not turn out as the market expects. Although many also consider what conditions or results should be given in the STEP so that there is an agreement for the transition.
The most insightful warn that this depends on what has to be obtained to agree on it. For now, from the world banking task force, the Institute of International Finance (IIF), came its vision of the PASO: in addition to qualifying them as critical, as were the PASO in 2019 when it marked the end of Mauritius’ re-election Macri, say they expect the opposition to do better than expected, but the situation is very uncertain and market sensitive.
At the same time, they warn that a better-than-expected performance by the ruling party could drastically worsen the economic outlook. Meanwhile, when another media battle between Cristina Kirchner and Mauricio Macri was looming, hours before PASO, an unfortunate criminal event eliminated her completely, dominating the media scene side by side with the future of “blue”.
Multiple speculations are opened from the results of Sunday. Even the market wonders what could be a black swan. In this sense, they mention, for example, the fact that Bullrich or Milei are the most voted candidate, or Massa collapses the polls. The truth is that a “wait & see” was called for when making portfolio decisions. As in the “liar’s poker” made famous by Michael Lewis, a banker at Salomon Brothers in the 1980s, everyone wants to see the cards before they play.
In other words, if the ruling party or the opposition won and by how much difference, and which candidate got the most votes, and if there is a third space in contention. All this will be revealed on “Sunday night. For now, in the run-up to the PASO, the demand for dollars does not stop.
The growing trades with the AL30 bond and the GD30 against MEP in BYMA (PPT T2) were records (although the CCL beat it). It is assumed that there was a strong intervention of the public sector. As for the “August” dollar futures, there were new increases while “September” and “October” operated stable.
Business volume continued to grow and the implicit rate for August futures closed above 500% of TEA (17% monthly). The operators point out that with the slowdown in the spot margin, which started to rise at a rate of more than 11% monthly, there is once again a certain cost in terms of “carry trade” for long futures short positions.
The August contract concentrated more than 90% of the growth in open interest, with September accounting for the rest. The total amount, so far, of contracts exceeds 4,200 million dollars between Rofex and MAE, grew by more than 1,700 million dollars in the first days of the month.
In any case, it is still very far from the highs of the year (almost 5.6 billion dollars at the end of May) and very far from July 2020 and 2022 when it exceeded 10 billion dollars. And speaking of hedging, a manager commented on the outflow experienced by the T+1 mutual funds, more than $100,000 million in a week (10% of the managed assets) and only a small part of the weekly flow, $18,000 million, was offset by net subscriptions to dollar linked funds.
Between roosters and midnight Don Miguel returned pesos to the Treasury. This time it was $250,000 million for the transfer of profits and thus it has already accumulated $400,000 million through this channel so far in 2023. In the market they estimate that by Organic Letter, the BCRA could distribute Profits for the year 2022 for about $700,000 million, of so that some $300,000 million would remain available.
Of course, the BCRA can also make Transitory Advances (ATN) but based on the IMF statement announcing the technical understanding, the agency stressed that the agreed fiscal path does not imply an additional dependence on direct monetary financing of the fiscal deficit, for which reason it is interpreted that if the Government wishes to meet the quarterly goal by the end of September, it should return ATN for an amount equivalent to the last drafts of Profits.
Source: Ambito
