The market operated thinking about next week’s Treasury bond auction and chose not to put pressure on the dollar. They sense that the LECAPs that will be tendered in the middle of next week will be at rates higher than 4%, a level that makes them look attractive and discourages the purchase of foreign currency.
But it was not the only deterrent measure. He also authorized the opening of savings accounts in dollars with the same advantages as those in pesos. The market took the measure as an advance to get out of the stocks.
But it wasn’t an easy day. The dollar began the round with a rise of 2% and, when the news began to appear that banks were being asked to pay higher rates and estimated that LECAP would come with better returns, they became sellers and at the close all the dollars remained with minimal increases of 0.2%.
The “blue” dollar rose $5 to $1,280 (+0.39%), while the MEP increased $2 (+0.2%) to $1,232.54 and the cash with settlement, (CCL), $2.25 (+1, 8%) to $1,258.44.
Exporters were not present and business in the Free Exchange Market (MLC) was only USD 257 million, of which USD 59 million was purchased by the Central Bank. Its reserves, however, rose by USD 80 million to 29,008 million.
According to Andrés Reschini’s F2 consultancy, “the end of the heavy harvest is approaching and agriculture is retaining everything it can, which is why the amount of business in the MLC is at the lowest level since Javier Milei took office. The rise in the gap these days does not help since it can encourage greater imports. Traditional fixed terms show a drop of $105 billion between May 14 and 20, equivalent to 0.5% of the stock. This, at an average MEP, is equivalent to USD 92 million, which seems little to generate the exchange rate escalation that we saw, although it is not harmless either. “Futures continue to dance to the beat of market rates and marked declines after two days of marked increases.”
The cos They had another negative cycle, like the debt securities of emerging countries. The rate of return on US Treasury bonds, which rose to 4.48%, was key. The reference titles ended at the lowest levels of the day with drops of almost 3% that caused the country risk to rise 31 units (+2.22%) to 1,426 basis points, a level that had not been seen since April 3.
For financial analyst Franco Tealdi “it was a difficult day for the market. It all started with the bad data from the United States of the PMI index (Purchasing Manager Index), a key indicator to anticipate the behavior of the industry, which reflected that activity accelerated. It was bad data for the Federal Reserve in its attempt to lower inflation. It blew up interest rates and brought a tremor to risk markets, particularly in emerging markets where indicators fell by up to 4%. This made him more fuel to the fire to the situation in Argentina which is blocked by the Bases Law and the May Pact that ceased to exist. After such gains in the previous rounds, the local market chose to take profits. The funds reduced their exposures in Argentina in sovereign bonds, stocks and securities in pesos. There is a pincer effect. On the one hand, an unstable external context and, on the other, doubts about the Base Law. As you can see, the prevention machine is working fully in Argentina.”
The bonds in pesos had a mixed round. There were sales to obtain pesos for the next Treasury bond tender. LECAP also sold investment funds due to the rescue of Money Market funds. As the price of LECAP fell, the yield of the securities increased.
CER bonds had mixed results. The shortest ones had increases of less than 1%. The best was the tender of the remaining USD 90 million of the BOPREAL series 3 that was placed in its entirety. The majority of the offers (USD 60 million) were from companies that want to transfer profits abroad. The rise in the CCL and the reduction of the gap with the MEP (swap) to 2.2% was attractive to investors because these bonds yield an attractive rate of around 18% in dollars.
The stock market had a negative turn. The Merval index of leading stocks lost 3.3% in pesos and dollars. Not even the banks were saved from taking profits. The most punished papers were BBVA (-7.93%) and Macro (-7.80%).
ADRs – share certificates listed on the New York Stock Exchange – suffered widespread falls, with BBVA suffering the worst, losing 10.1%.
Today’s question is whether the dollar has reached the ceiling, a key piece of information for investors who imagine a hidden rate increase through the LECAP that can once again yield above 4%.
The Ministry of Economy has no doubt that there are reasons for the dollar not to rise because agriculture has withheld a large part of the harvest and is waiting for better prices from Chicago. The contribution of dollars from the sector to the CCL market is key to preventing the currency from rising and encouraging inflation.
