Latest inflation data The official rate (4.2%) left a bitter taste in the market. However, expectations are being reconfigured for September, a month in which some impact is expected due to the drop in the COUNTRY TAX and that the price dynamics will be around 3.5%. This was anticipated by JP Morgan, which estimated that the Consumer Price Index (CPI) for the ninth month of the year could be estimated at 3.4% after the tax was lowered from 17.5% to 7.5%. In this context, the question returns among investors about what to bet on: CER bonds or Treasury capital bills (Lecaps)?
A fact that cannot be overlooked is that wholesale price inflation which was announced on Tuesday, slowed to 2.1% monthly in August and marked the lowest level since May 2020, at the rate of “crawling peg“and to which the Central Bank (BCRA) has been clinging since January. Point for the Lecaps.
Nicholas Capellasales trader at Grupo IEB, pointed out in his “view of the day” that as observed since last Friday, “the CER curve looks weaker than the fixed rate.” For the analyst, the market has once again bet on the rate since in September “we will see a drop in general and/or core inflation. As a result, CERs fell by an average of 0.5% today. On the other hand, Lecaps were firm and posted increases of 0.3%, slightly depressing compared to Friday,” he explained.
Capella’s analysis coincides with that of Delphos Investmentwhich maintains that the curves in pesos continue to bet on a trend of deceleration of inflation, “with the CER curve registering an average fall of 0.5% and The Lecaps curve showing increases close to 0.3%”.
For Delphos, with an estimated inflation of 18.3% per year as outlined in the 2025 Budget, Longer Lecaps could benefit significantly“given that the yields of the S29G5 and S12S5, with maturities in August and September 2025, are at 3.95% Monthly Effective Rate (TEM), well above the projected inflation.”
A driver to be closely followed by Treasury bond holders, is that although the rates of these instruments are at attractive levelsthe recent fall of the financial dollar impacted on their risk-return ratio. “Although the financial dollar could continue to fall and the exchange rate gap could continue to narrow, a possible rebound in the exchange rate could erode the returns of Lecaps in the short term,” Delphos concludes.
Lecaps vs. CER bonds: what analysts say
Andres Reschinianalyst at F2 Financial Solutionshe comments in dialogue with Scope that everything indicates that the market continues to go more to Lecaps than to CER. And the “break evens” (implicit forecasts, derived from bond prices) did not vary much after the inflation data for August and “since the Treasury approved a higher rate for Treasury Bills, there is no rotation to CER,” he says.
Reschini adds another driver to keep an eye on: “Market expectations still do not break through the three-odd monthly inflation rate (3.3% implicit in December and 3.5% in January). For the strategist, this is where the Government has a great challenge, “to be able to demonstrate that inflation will continue to fall rapidly.” Let us remember that for 2025 the budget project foresees an inflation of 18.3%, which is equivalent to 1.4% average monthly, while the market continues to project, according to bond prices, a little more than 3%, at least until the first quarter of 2025, he indicates.
For its part, the independent financial advisor, Martina Del Giudiceindicates that the rise in inflation in August “does not seem alarming, since part of this increase is due to increases in public transport and energy services,” whose measures are part of a strategy aimed at reducing subsidies and improving fiscal health. Something that is positive for the market. However, for the strategist “it will be key to follow the evolution of this normalization of rates in the near future that will lead to stable inflation at levels of 3.5% to 4% by the end of the year.”
As things stand, Del Giudice recalls that the first market reactions included a disarmament of the long part of Lecapsgenerating a slight increase in CER bonds and a decrease in Treasury bills. However, it suggests that it is possible that in the coming days we will see a greater demand for inflation coverage – to the detriment of fixed rate bonds -, which has been seen since August and is now again driven mainly by the core inflation data, which experienced an increase to 4.1% from the 3.8% reported in July and this being the highest level since April. “The reduction of the PAIS Tax could facilitate a slowdown in the following months, although the market does not yet contemplate this scenario.”
Current performance of capitalizable fixed-income instruments
According to From the GiudiceWith terms of less than 90 days, the average yield is 3.65% TEM; 3.9% TEM in an approximate medium range and 3.95% TEM for longer terms of less than 360 days.
That’s why the strategist recommends continuing with short-term Lecaps positions. For conservative profiles with a longer time horizon, however, consider taking shelter in CER titles could be the best alternative. However, given the budget presented for 2025, those who are optimistic about this proposed path of downward inflation, could evaluate the acquisition of medium/long-term LecapsDel Giudice concludes.
Source: Ambito
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