How long will the honeymoon that keeps the dollar still last?

How long will the honeymoon that keeps the dollar still last?
How long will the honeymoon that keeps the dollar still last?

The honeymoon that the market has with remains in the run-up to the long weekend, with the expectation placed on the inflation data for September, which the INDEC will release this afternoon.

In this wheel, bonds fall slightly, around 0.5% and thus they pause the rally that they have been dragging on since August. This led the country risk to rebound to 1,138 pointsafter having touched 1,121 points on Wednesday, the lowest level of the Milei era. Even so, it is down 11% for the month.

In the case of dollars, the blue remains in $ 1.175while the MEP drops to $ 1.144 and the cash with liquid goes back to $ 1.185. The Merval rises 1.1% and Argentine shares on Wall Street move higher, led by YPF with 3.7%.

For analysts, this good streak has the potential to extend and in the medium term it would only be threatened If the decline in inflation is stopped, although they are also concerned about the difficulties that activity has in growing again after the sharp drop it had in the first part of the year.

For now, analysts see more points in favor than against. In this way, to the recommendations that Morgan Stanley gave days ago to invest in Argentina was added that of Jefferies Financial Group Inc, which indicated in a report that saw room for more gains in local bonds, according to the Bloomberg agency.

“The rise in debt may be linked to investors’ fear of missing out on opportunities and to the government’s measures to return dollars to the country,” Jefferies strategist Javier Kulesz wrote in a note to clients on Wednesday.

There it is detailed that “The government’s measures are being successful, with more dollars than expected returning to the country”. Since the laundering, from mid-August around US$13,000 million.

Kulesz added that “it is very difficult to imagine a scenario in which the government forces the market into a unilateral debt transaction or a complete default.” The strategist does not haveno doubt” that the government will be able to meet its 2025 obligations, even if the country’s net reserves have to reach new lows to do so.

The consulting firm 1816 notes that global bonds have risen 22% since July and that rise has accelerated so far in October. And they point out that “the market is beginning to see it.”

“The last few weeks were outstanding for the peso and for Argentine financial assets and what happened these days was even more remarkable because it occurred in a heavier context for emerging markets. For us The market began to incorporate that the outlook for the balance of payments 2025 greatly improved, thanks to laundering (which generates local credit potential in dollars and the offshore appetite for corporates), says 1816.

“With the new scenario it seems possible to cover the public debt maturities of 2025 without losing many reserves, and it is logical that this drives the demand for sovereigns,” they add.

“In contrast to the euphoria of the markets, the first data for September leave mixed feelings for the macro: Activity numbers were mixed (like in August)”, adds 1816.

Javier Casabal, Fixed Income Strategist at Adcap Grupo Financiero, maintains that “the dollar may continue to fallespecially in this period of purchases by the Central Bank.” So far in October the Central has purchased US$551 millionmore than he achieved in all of September.

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