Today will be a true “Super Wednesday” for the markets, not only in Argentina but also for Wall Street. In fact, investors acted cautiously in the first two days of the week, waiting for fundamental data to operate.
The treatment of the Bases bill in the Senate today will be a litmus test that will define the government’s ability to advance politically. The start of the session is scheduled for 10 in the morning and could last all day. A while before, at 9:30 local time, the inflation data for May in the United States will be known, which could be conclusive about future rate movements by the North American Federal Reserve.
Yesterday, dollarized bonds had slight falls, after a strong recovery on Monday. The country risk rebounded 2% to 1,526 points. In any case, it was a day full of rumors about the vote of the Base Law. In principle, investors believe that it will be approved but with a lot of changes regarding the project that came from Deputies. It is estimated that no less than 50 changes to the original text would have been introduced in the Upper House.
From Adeba, the entity that brings together national private capital banks, they also sought to give a boost to the Bases Law, although without mentioning it. In a meeting with journalists, the head of the entity, Javier Bolzicoindicated that “we hope and trust that the current administration will carry out its government plan with the skill and support necessary to generate as soon as possible the conditions for the sustained growth of the economy and employment.”
Previously, Bolzico had expressed the bank’s support for government initiatives such as fiscal balance, currency competition and the opening of Argentina to the world, along with the care of the most vulnerable sectors.
Both bankers and investors quietly recognize that if the treatment of the Bases Law fails, the impact on the markets could be catastrophic. There is even talk of a country risk that could return to a range of 1,800 to 2,000 points. This means that the bonds would fall to the levels they had during the last stage of Alberto Fernández’s administration. This means going from levels of USD 50 to USD 35 on average without anesthesia.
The Argentine debt scenario will have a before and after of the result in the treatment of the Bases law. If it is not approved, the fall in bonds could be precipitous. There are many who believe that if the official initiative fails, prices could return to levels of 35 to 40 dollars.
In the event of approval, however, great euphoria is not expected, but the most negative scenario is expected to be avoided. The Government’s minimum objective is to return to the country risk area of 1,200 from a month ago. All considering that the approval of the fiscal package would bring more relief to public accounts, beyond the somewhat more devalued content of the Bases law.
Of course, the international context will also play its part. Today will be an intense day for Wall Street. The May retail inflation data in the United States will provide a clue about the future of interest rates. If the index is higher than anticipated by analysts, the impact could be very negative.
On the other hand, the Federal Reserve will hold its open market meeting today, but investors describe it as “boring.” The result is expected: there will be no change in rates this time, but it will be interesting to follow the clues they offer about how monetary policy will continue in the second half.
For now, the New York indices continue to set records, yesterday thanks to Apple, which rose more than 6% due to the presentation of its new generative artificial intelligence platform.
