It is because New York law titles had risen in the weeks prior to the elections. Milei’s more pragmatic speech helps prices recover.
A phenomenon was unleashed after the election results were known. The markets seem to overreact to the triumph of Javier Milei and, in that context, everyone is looking to take positions in assets that until now looked cheap. Such is the case of the bonds in dollars of local legislation.
The so-called Bonares registered, since the result of the ballot was known, an increase of 45% measured in pesos. “Yields in pesos showed a strong recovery after the election result was known. Part of this increase in prices is explained by the rise in the financial dollar, but the rest is due to factors specific to the new scenario,” the MegaQM brokerage company maintains in its latest report.
The rise of local legislation bonds was something that was expected. The market positively perceived the message of honoring the commitments that Javier Milei launched as soon as the results were known, which significantly improved prices. There was a gap with respect to the hard dollars of New York legislation, which had risen more in the previous days.
In this regard, the LCG consulting indicated that “in the case of Argentine legislation titles, the increase was greater than 17% compared to the Friday before the runoffwhile the New York law increased to a lesser extent (13%)”, which means that “there is still room for the spread between legislations to be limited to some extent.” In the last day the AL30 rose 1.6% and AL41 2%.
MegaQM maintains that “The main thermometer of the confidence generated by the announcements will be the level of the exchange gapwhich starts at very high levels and has to be lowered significantly to make the rest of the variables converge.”
It is clear that The new government’s commitment is to try to generate a framework of trust so that the differences between the free versions of the exchange rate and the official one are limited.. While Javier Milei’s potential Economy Minister, Luis “Toto” Caputo, aims to show a 5% deficit adjustment plan, at the same time he tries to get dollars.
The economist and financial consultant Rodrigo Alvarez pointed out that Caputo “reassures the market, although definitions are still lacking” of the new team and how it plans to make the adjustment. Álvarez considered that the trip to the United States with the elected president Javier Milei seeks “the support of the IMF” in the face of the dollar maturities that are going to happen as soon as the next government takes office until February.
For his part, The stock exchange company Adcap Grupo Financiero points out that “New York Law bonds have been strongly outperforming their Argentine Law peers in recent weeks, while the markets remained cautious regarding the results of the second electoral round and the different proposals of the candidates.” Depending on the outcome of the election, he believes that “riskier bonds started to outperform again.”
Source: Ambito
