After the approval of the Base Law, the disbursement of the IMF and the renewal of the USD 5,000 million swap with China, the good news of inflation of 4.2% in May was added.
Investors responded with euphoria and the Government with a small deregulation of the stocks by lifting the obligation for people who invest in dollars to send their currencies to the bank. That way, they will be able to reinvest the principal and interest payment on the bonds without having to first transfer it to a bank account. Now they can have 15 business days. The fateful communication “A” 7340 from the Central Bank irritates investors and they want it to be definitively repealed. Yesterday the BCRA took a step in that direction.
Although it remains to be clarified what will happen in the Chamber of Deputies, after the rejection of the chapter on taxes on Income and Personal Assets in the Bases law in the Senate, the market believes that President Javier Milei will achieve its reform.
Beyond the details, sovereign bonds and stocks flew, while the dollar in all its versions collapsed. At the same time, the possibility of having positive interest rates appeared on the stage because May inflation is close to the yield of the LECAP, which was in high demand.
The dollars were the big losers during the round. The Big hands They were sellers from the opening. The cash with settlement (CCL) lost $27.48 (-2.1%) and closed at $1,274.21. The MEP fell $37.84 (-3%) to $1,241.10. The free dollar adjusted its prices forcefully. It dropped $40 to $1,245.
In the Free Exchange Market (MLC), USD 365 million were operated, of which the Central Bank kept 137 million and increased its reserves by 9 million to USD 29,273 million. Importers earned USD 228 million.
Regarding the businesses in the MLC, the report from the consulting firm F2, by Andrés Reschini, highlights that “it is the largest amount settled since May 16. Although the modifications in Earnings and Personal Assets were rejected in the fiscal package, there may be revenge in Deputies.”
He highlights that with 4.2% inflation in May “the spread between repo rates and CPI would already be disappearing, confirming negative rates are coming to an end. If we replace the CPI with core inflation, which was 3.7%, the blender practically disappeared in May. Hand in hand with the euphoria over the Bases law and greater settlement through the blend 80/20, the CCL had the largest daily drop since February 16, although the gap with the exchange rate is still around 40%.”
Of course, the futures market was calm because there was no point in betting against it as devaluation seems further away.
Sovereign bonds were the big winners with increases of more than 4% in the most representative bonds: the AL30D and the Global 2030. There was greater demand for Globales 2035 (+4.1%) and Global 46D (+5.1 %).
According to the Adcap Grupo Financiero Research team, “with the rise in sovereign bonds materializing, we see an opportunity in Bopreal and instruments tied by inflation. After the approval of the Bases law and the Fiscal Package, the sovereign curve reacted quickly and met our optimistic objectives. With this, the Government could regain much of its prominence and drive the political agenda.”
In bonds in pesos, after the fall of the dollar, the investment fund sees an opportunity “as some pressure disappears. Furthermore, the fact that the PAIS Tax is reduced from 17.50% to 7.50% will reduce part of the support of the dollar. Therefore, we see a 7% increase in BONCERs. Alternatively, BOPREAL could be an opportunity with an average rise of 4%, since they had been left behind.”
Nicolás Cappella, a stock market investment trader, asked himself if “After the Bases Law, the approval of the swap and a new loan from the IMF, can we expect a lifting of stocks?”
The rise in sovereigns caused the country risk to fall 63 units (-4.2%) to 1,421 basis points.
CER bonds had a notable fall due to the announcement of the end of negative rates. “Positive real rates are important in the face of a possible lifting of the stocks and also to see whether or not the banks exercise their puts (options for early sale of bonds to the Central Bank) which is, according to Milei, the only thing that remains to be resolved to lift the stocks,” Cappella said.
The LECAPs continued to rise and the rates were in a range of between 3.05% for the shortest 17 days and 4.09% effective monthly for those that expire next February.
The long section was heavier because it is expected that in the next Treasury tenders there will be shorter-term options that offer returns above 4% to sustain this positive rate policy.
The stock market had a positive turn. With the approval of the RIGI for energy investments, investment announcements from oil companies did not take long to arrive. In this way, the Merval of the leading stocks rose 2.4% in pesos and 4.6% in dollars.
The most prominent roles were those of the banks. Supervielle rose 7.67% and energy companies had increases of more than 5%.
ADRs – certificates of stock holdings listed on the New York Stock Exchange – had supremacy of increases. The best was in Supervielle (+9.9%), BBVA (+7.3%) and Central Puerto (+7%).
For today, a rearrangement of the CER bonds is expected and we will see what luck the dollar continues. Sovereign bonds may have an additional boost. The most sought after have parities of almost 57%
