The American economy is showing that inflation is indomitable, the return rates on American treasury bonds are on the rise, the 6-month rate is at 5.3% annually, and the 2-year rate is 4.88%. annually and for 10 years at 4.5% annually. The market has lost appetite for American treasury bonds and the tenders are not attractive, one more reason for the rate to rise. To this we must add that the business results of the banks were not positive, and this began the profit taking of the 4 stock market indices in the United States.
In this context, Argentina saw the price of sovereign bonds fall in an international context that was clearly adverse to it. From the fundamentals, sovereign bonds should continue to rise, since we are on the verge of the government showing its third positive fiscal result, and it has been consolidating the Central Bank’s balance sheet.
Reserves will soon exceed US$30 billion, the soybean harvest would be 52 million tons, and prime corn about 20 million tons. The arrival of soybeans to port in significant quantities will begin next week. By the end of the month the reserves will be more solid, and the US$ 1,940 million of debt amortization to the IMF will be able to be paid.
The Central Bank of the Argentine Republic lowered the monetary policy rate to 70% annually, this caused the fixed-term rate to drop to 60% annually, this implies an effective rate of 79.5% annually.
The Market Expectations Survey (REM) of the Central Bank indicates that the inflation rate for the month of March 2025 would be 120.9% annually for the average consultancy firm, while for the TOP 10 of the consultants that have the best successes project 130.3% annually. From our point of view, inflation as of April 2025 would be 122.4% annually, this implies that if we make a fixed term we will obtain a negative interest rate of 19.3% compared to inflation. Those who save in a fixed term all lose, only those who make a UVA fixed term are saved, which is the one that adjusts for inflation.
The devaluation rate that we estimate as of April 2021 is 81.1% annually, which is almost in line with the effective fixed-term rate, which is 79.5% annually.
In the last tender carried out by the treasury, the bond in pesos adjusted for inflation with maturity in December 2025 left an interest rate equivalent to inflation minus 13.3% annually, which is better than making a fixed term that measured over one year. It would leave you with a negative interest rate against inflation of 19.3% per year. The lecaps, which are capitalizable bills in pesos that mature in October 2024 and February 2025, yield 64.2% and 67.0% annually. In both cases, these bills pay lower rates than the 30-day fixed term that yields an effective rate of 79.5% per year, which would indicate that the market suspects that the interest rate is certain to be on a downward path.
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In the treasury tender, the tender for a bond in pesos adjustable per wholesale dollar with maturity in June 2025 was void, this explains that the market does not believe that the government is going to devalue the peso immediately.
In this context, bonds in pesos adjusted for inflation and sovereign bonds in dollars continue to be two good savings options, since the government will continue to show a fiscal surplus.
In the financial market, company promissory notes denominated in dollars with a 180-day term yield rates of 8.0% annually. These promissory notes are very attractive since they are mostly guaranteed by Reciprocal Guarantee Companies (SGR). These promissory notes compete directly against negotiable obligations that for terms less than 2026 are showing single-digit returns.
The CCL dollar seems to have found a floor, if you import merchandise and make the payment with the CCL dollar you do not pay the country tax. If you import through the free exchange market (MLC), you do so at a dollar of $870 plus 17.5% country tax, that gives us a dollar of $1,022.25, while the CCL is worth $1,050, although the The difference is minimal, with the CCL you pay in a single payment, while using the MLC you have to make it in several payments and it is very cumbersome for the supplier.
This will generate a demand for the CCL dollar that will end up pushing the MEP dollar. It is no less true that there is an offer from exporters in MEP and CCL dollars due to the rule that allows exports to be settled 80% in wholesale dollars and 20% in CCL or MEP dollars, however, we believe that the dollar in these values It would seem that it has reached a floor, and it will be difficult to break through. We could say that the price of $1,000 for the dollar is a floor, but at the moment we cannot foresee a strong recovery from current levels.
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In the month of June, the liquidation of exports at 80% wholesale dollar and 20% CCL dollar would be completed. This will force an exchange rate unification, which could be disadvantageous for exporters who would lose some price. Be careful with competitiveness.
Conclusions
. – The government does not seek devaluation to liquidate debts or gain competitiveness. He will do it via lower taxes when he can.
. – The government is lowering the interest rate because it sees that in the future it has a scenario of sharp price declines, as a collateral effect it seeks to restore credit in the market to push for a reactivation scenario.
. – Sovereign bonds and bonds in pesos adjusted for inflation could continue to rise, the international scenario is playing against it, but everything can be overcome.
. – The soybean and corn harvest would provide a large flow of dollars with reserves that easily exceed US$ 30,000 million, and we will have no problem honoring the IMF debt.
. – The low dollar is here to stay, therefore, you have to look for investment options, construction is at reasonable prices, buying a finished apartment seems like something very appropriate. Exporters must seek competitiveness through greater investments and better management.
. – Stocks are in waiting mode, they have a lot to go up, but it will be essential for congressional laws to come out to boost money laundering and incentives to invest in certain sectors.
. – The change in economic policy leads us to look at investments from another place, the dollar is an investment of the past, and we will have to look for more sophisticated methods to make money in an economy in transition, which seeks fiscal balance, capitalization of the Central Bank , and pay the debt of the past, not easy, nor impossible. The key will be investment.
Source: Ambito
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