It was not just any financial week. The necessary legislative process of the agreement with the Fund International Monetary Fund, which was overcome with the vote in the Senate, conditioned business financial markets, also affected by the reaction of international markets to the news of the war in Ukraine.
The result was positive for investors. The panel S&P Merval of the Buenos Aires Stock Exchange, in the 89,057 points, advanced a minimum 0.1% in pesos and yielded 1.4% measured in dollarsbut already discounting the agreement for the debt with the agency, it retains a profit in hard currency of 11.2% in 2022, in a historically bad quarter for Wall Street.
Therefore, having avoided a foreseeable disarmament of positions with the approved deal (“sell with the news”) is a good sign, given that the application of the demands committed to the Fund predict very hard months for the macroeconomy, in the process of stagflation and lack of dollars.
“The final approval of the agreement with the IMF is a step forward which for the moment avoids greater macroeconomic complexity, mainly in financial terms. However, this does not solve the problems problems that the Argentine economy has, which must be addressed, sooner rather than later and despite the resistance within the official political space, through a stabilization program. Not in vain the President’s announcement, although not very wise given the context, about the war that is beginning”, he summarized Martín Calveiraresearcher at the IAE Business School of the Austral University.
The dollar bonds gained 2% weekly according to the reference of the Globals, in a recovery movement that must be put into context, since these restructured securities have fallen 2.5% on average so far in March, and 6% since the beginning of 2022.
“The sovereign bonds naturally had a positive reaction to the progress of the agreement with the IMF but they have been showing a lot of volatility so far this year. The uncertainty generated by the armed conflict in Ukraine was one of the factors that did not help sovereign bonds to show a better performance, while the monetary adjustment cycle initiated by the Fed could slow bond recovery speed sovereigns”, the experts from Capital Balance.
In the same sense, the risk country JP Morgan, which measures the rate gap of US Treasury bonds with similar emerging issues, was below 1,800 units, in 1,786 points basic, after having touched the 2,000 points on March 8.
“Sovereign bonds in dollars, with a lot of volatility involved and sensitivity with respect to emerging debt, continue to be punished in their parities and lose that correlation that they usually have with the ‘cash with liquidation’ and the accumulation of BCRA reserves. We aim that the titles are still at oversold prices and can be an alternative considerable to enter with pesos also assuming the fall in the exchange rate, “he stressed Lucas YatcheHead of Strategy and Investments de Liebre Capital.
The progress of the dialogue between Russia and Ukraine decompressed the tension in the foreign markets, still subject to a very wide volatility. In the week, the Dow Jones Industrials gained 5.5%; the S&P 500, 6.2%, and the technological Nasdaq, 8.2 percent. However, in 2022 these indicators remain red at 4.4%, 6.3% and 11.5%, respectively.
Also the Federal Reserve of the USA ratified on Wednesday 16 the signal of reversal of its ultra-loose monetary policy from the COVID-19 erato intensify its fight against persistent inflation, by announcing the first in a series of planned interest rate hikes this year.
In the statement issued by the entity, considered that further rate increases will be necessary of interest in the future. In addition, the Fed forecasts an inflation of 4.3% in 2022 in the US.
The change of posture, with a increase of a quarter of a point in the reference rate to one day, it has been preparing since last year and has already raised the cost of mortgages for homes in the US and other types of reference credit, in anticipation of what the Fed will do to curb prices that last Thursday they showed their largest annual increase in 40 years.
Free dollars probed year lows
In the exchange market, the path of gradual devaluation imposed by the Central Bank continued, with a dollar wholesaler who at $109.70 earned 82 cents or 0.8% weekly.
They impacted on the exchange market two news with negative reception. On the one hand, the export closure before a possible readjustment of withholdings for these products from 31% to 33%, crushed the volume operated in the formal market and prevented the monetary authority from recomposing reserves at the rate it had done in the first tranche of March.
On the other, the official inflation data for February, at 4.7%was disappointing and put a limit on the fall of dollar prices alternative to exchange controls, which had broken through the floor of 200 pesos.
The free dollar ended the week at $202.50while the “cash with liquidation” and the MEP converged at $196, prices that could be marking a closure to the correction stage that began on January 28, when President Alberto Fernández announced the understanding with the IMF.
“The inflation worries more and more and unfortunately, the worst is yet to comebecause for the CPI for March, no one expects better data, with the war as a background scenario, increases in fuels and the fact that, seasonally, it is a difficult month”, he considered Ariel Manitocommercial manager of Portfolio Personal Inversiones.
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