Markets: bonds operated volatile and country risk approached 3,000 points

The Argentine debt, in renewed minimum prices.

Sovereign bonds traded with a lot of volatility and traded with declines that exceeded 2% in the morning, a trend that they managed to reverse at the close, while stocks traded higher due to hedging given the weakness of the peso in a context of high inflation and tensions in the governing coalition.

The new Minister of Economy of Argentina, Silvina Batakis, met this Monday with Kristalina GeorgievaManaging Director of the International Monetary Fund (IMF), which is expected to bring calm to the market.

Global bonds, in dollars with foreign law, ended with a marginal rise of 0.1% on Wall Street, although they traded in the red for most of the session. The risk country JP Morgan, which measures the rate gap between US Treasury bonds and their emerging peers, reached an intraday high of 2,976 pointsa record since the sovereign restructuring of 2020. At 5:10 p.m. the country risk stood at 2,927 basis points.

The stock index S&P Merval of the Buenos Aires Stock Exchange gained 5% in pesos, to a new nominal historical maximum of 119,508 points at the close, after accumulating an improvement of 9.2% last week due to hedging.

“The actions of the leading panel developed increases, influenced to a large extent by the high rise in the exchange rate with liquidation throughout the days. Likewise, boosted by expectations of devaluation”, said Gisselle AveniaRava Stock Market analyst.

Externally, investors await the monetary policy decision to be taken this week by the United States Federal Reserve (Fed). The Fed wraps up its two-day meeting on Wednesday and markets anticipate a rate hike.

“The uncertainty sharpened sharply this week, and the pressures that worsened at the end of June -motivated by the shock in the debt market, import restrictions and the turbulent ministerial change- led to the current financial crisis: This week the parallel prices of the dollar increased by more than 10% on average, bringing the exchange gap to the 150% zone, exceeding the levels of October 2020. In turn, the country risk was close to 3,000 basic points, in the midst of a general collapse in the price of bonds, which are currently trading for the most part at a parity below 20 cents per dollar,” he said. Ecolatina in a report.

“It is clear that the current levels of risk perception demand forceful and comprehensive responses from politics and from the economy, and the sequential succession of specific announcements -through communiqués- for the moment lacked the necessary strength to distort expectations. . This is exacerbated by a crisis of mistrust in the Government that contributes to feeding back the risks”, added Ecolatina.

“Silvina Batakis’s trip to the United States will seek to establish a personal relationship that is always important. She is going to test the water to see if it is possible to change goals. She will surely comment that Guzmán did some fiscal cosmetics, that he found himself with a worse situation reflected in the last review and that it is necessary to change the goals: fiscal deficit, monetary financing, etc. Surely the Fund will ask what kind of policy changes Argentina will make and there the most serious problem that I see is that any commitment that Batakis can take can never have more credibility than that of the government in which she participates, which is very little. It is one of the most serious problems in any negotiation when one of the two parties does not make credible commitments. The give and take becomes very difficult, ”she commented for Millennium FM Hector Torres, former Argentine director at the IMF.


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