Various reports circulating in the city explain how to do it and which instrument to use: CER or Lecaps?
While financial dollars continue to move sideways, the Lecaps curve operated with monthly rates (TEM) close to 3.88% this week. That is why market analysts maintain that There is still room to carry out the famous “carry trade”however they explain that There are risks and they asked to operate with “caution.” Thus, various reports circulating in the city explain how this financial strategy should be carried out and which instrument to use: CER or Lecaps?
“We continue to see certain pressures on inflation both due to inertia and the expansion of private credit, so We maintain our preference for CER over Lecaps, although we recognize that the latter may be attractive for carry trade positions given the government’s commitment to contain the gap. That said, the weak position of net reserves invites caution in taking such positions,” they explained from SBS Group.
Lecaps vs. CER
The long section of the Lecaps curve this week returned to operating with TEMs close to the cut-off of the last tender (August 3.88% TEM)while the shorter bills compressed in line with the rates of the middle bracket. “The market is cautious and speculating on next week’s tender,” explained IEB. On the other hand, The CER curve corrected in the medium and long range, while longer bonds advanced.
“For reference today The implicit breakeven inflation between CER bonds and Lecaps is 3.35% average monthly until the end of the year and 3.25% for the first months of 2025which a priori looks high for next year. On the other hand, financial dollars fell during this week where the central bank was seen selling foreign currency again, especially in the first two rounds of the week,” they explained from IEB.
Thus, just like Grupo SBS, this broker considered that CER bonds are preferable for “carry trade” in this context, where money laundering would allow this strategy to continue.The instruments in pesos that we see attractive for this strategy are the average CERs that have real rates of 8-9% With inflation showing difficulties in breaking through 3% in the coming months and with expectations of the lifting of the currency controls being postponed, they look interesting. Alternatively, we believe that long Lecaps at levels of 3.8% may also have value, although we prefer to wait for the tender positioned short in September.“, they concluded.
Source: Ambito
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