As stated Epyca Consultants analyst Eric Paniaguaends “a complicated week, more than anything, because Monday is red for the markets” and, in that context, points out that Fixed income is a good space always for the most conservative investors and even for those who are not so conservative, but who, at this moment, are going through a moment of fear.
Fixed income regains attractiveness in the face of volatility
Mentions that Rates are being compressed a lot globally and this makes “many people start to think about investing in assets from emerging markets, which are riskier, such as shares or instruments of some Argentine companies: such is the case of Pampa Energía or YPF, which will surely be fulfilling their obligations.”
For its part, F2 Financial Solutions analyst Andrés Reschini He points out that “we are in a market that is inclined towards improvements in terms of decrease in inflation but cautious when it comes to paying for bonares and global bonds and an exchange rate gap that is struggling to close.” In addition, as stated, he mentions that The international scene brings a greater dose of uncertainty to local conditions.
He stresses that, although, “as always, Investments must be adapted to each profile, There is interest in the peso curve due to the relative calm in the exchange rate, which was put to the test by the international earthquake, although this Thursday there were strong bets on the financial sector,” given that there was a strong rise in bank stocks due to the recommendation of Bank of America (BOFA).
The slowdown in inflation and CER bonds
To which the independent professional specialized in the financial services industry Marcelo Bastante He adds that, “in fixed income, we have to look at investments that have lagged behind in prices.” In particular, he mentions bonds that adjust for CER, that offer positive real returns at this time.
“The truth is that these bonds, when Inflation was very highyielded negative real rates (they reached a CER of -10%) and, today, the panorama is the opposite, with the difference that when inflation falls, the CER index logically falls as well,” explains Bastante. He adds that the calculation of the CER has a lag, since the first days of the month it is calculated based on the price index from 2 months ago, and then estimated based on the inflation of the previous month.
Thus, it points out that bonds adjust by CER with a 10-day lag, which implies that, in a context of disinflation, when adjusting for past inflation with a lag, the inflation adjustment ends up being higher than actual inflationand in addition to this, bonds today yield a positive real IRR, which opens a window of opportunity for the investor, as Bastante mentions.
More risk in the face of a $1 million volatility projection
Meanwhile, he adds that, “for riskier profiles, There may be opportunities in equities after the significant drop that occurred last week and at the beginning of this one” due to the financial collapse, despite the recovery in recent days.
Reschini, for his part, points out that Sovereign bonds in foreign currency and bopreales “are still tempting for those who dare to experience greater volatility”“, although he also highlights that there are good dollar linked and CER coverage options for those who want to be more secure.
However, looking ahead, Bastante anticipates that “volatility will continue“, which highlights that this type of investment is for riskier profiles, or for those who have a longer investment horizon.
Thus, today, the best refuge for $1 million for those seeking to protect themselves from the local context and strong global volatility is Fixed-income instruments that lost value due to falling inflation and the inflationary course in the case of the most conservative investors, while Other riskier assets are an opportunity only for those who bet on the longer term.
Source: Ambito
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