A very positive day: foreign funds bought local bonds and made them rise up to 9% while the dollar fell

The rise in sovereign debt bonds reached the entire region, due to the better conditions of US Treasury bonds which, as they increased in price, reduced their rate of return to 2.68%. At the end of last month the rate was 3.36% and attracted all capital.

“Today we are negotiating high and rising amounts. This bond euphoria has been going on for a few days and is global. Until not long ago they were at an absolute low. Today they are demanded along with corporate bonds and the figures purchased confirm that there are funds from abroad acquiring Argentine titles driven by the words of Powell (head of the Federal Reserve) and the changes in the Government”, said Nicolás Rivas, trader of Buenos Aires Valores. (BAVSA). “There were requests for a million bonds and that does not come from the hands of here”, he added.

The LATAM (Latin American) bond investment funds also celebrated the rise in titles because the country risk not only fell in Argentina, but also fell by more than 3% in Brazil and Peru. He also backed down in Ecuador and Colombia. In this way, the investors of these funds were enjoying significant profits in pesos and dollars.

Argentine bonds had the most important rise because it coincided with a sharp drop in the dollar. Global bonds rose to 9.12%, as was the case with the bond maturing in 2035. For this reason, country risk fell 145 units (-5.4%) to 2,538 basis points. On Monday, the country risk was about to break the ceiling of 3,000 points. If someone believes that this rise in bonds has to do exclusively with what happened in the Argentine economy, part of the credit would go to Silvina Batakis.

Where the Cabinet changes had an impact was in the foreign exchange market. The alternative dollars expressed the best expectations with their prices. They were a vote of confidence, helped by the revaluation of the bonds with which they are negotiated. For example, the AL30D, which until recently traded at 17.50 cents on the dollar, yesterday closed at 21.54 cents and its yield fell from 48% to 42.68%. The other bond chosen by those who make cash with liquidation, the GD30, increased 9.12%. In this way, the MEP dollar lost $25.61 (-7.9%) and was the only dollar outside the Single Free Exchange Market (MULC) that traded below $300, closing at $298.16.

The cash with settlement had a more attenuated drop of $10.50 (-5.2%) and ended at $321.90. The gap between the two dollars, that is, the cable, grew to 8%, which could unleash a huge movement in the Cedears market – certificates of ownership of shares listed on the New York Stock Exchanges.

“The cash with liquidation began the wheel on the rise in the first operations on the screen that are of little volume and then began to fall without pause”, commented Rivas.

The rise in rates by 8 points, which put a floor of 81.3% effective annual for fixed terms, also affected the fall of the dollar. Those who should be celebrating this movement the most are those who on Wednesday participated in the tender for Treasury Bills and placed their pesos in a discount bill that expires at the end of October at an effective annual rate of 92%.

The wholesale dollar rose 21 cents to $131.12 and continues its rate of devaluation of 80% per year. The lack of liquidations of the exporters turned the Central Bank into the only seller and had to dispose of USD 100 million for the purchase of energy. Reserves fell USD 138 million to 39,214 million. On three wheels they lost 535 million.

The Stock Exchange, with another business record of $3,409 million, had a slight rise in the S&P Merval, the leading stock index, of 0.52% in pesos. But if that increase is measured in dollars it reaches 6.3%. The best performing stocks were in the energy sector. The influence of the cabinet change was seen in the 10.12% rise in edenor. They also increased Southern Gas Carrier (+6.27%) and center port (+3.78%).

The ADR’s, operated no less than $13,490 million and established another business record. The best behaved were edenor (+20.1%), followed by Southern Gas Carrier (+13.3%).

For today, volatility is expected to subside. The market awaits announcements to see which line the new economic driving will follow.


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