The market, more optimistic due to the Omnibus Law: falling exchange rate and rising dollar bonds

The free market is the one that sets the price to the dollar, always. And now that the Central Bank does not intervene, it has found, at least for the short term, a balance value. Of course, this value is related to the hope that the Omnibus Law will be approved and waiting for the political consequences of the strike and mobilization to which the CGT called and the entire spectrum of the opposition joined.

Therefore, after last week’s rally, the price seemed to adjust, particularly for cash with settlement (CCL), which lost $26.78 (-2%) and closed at 1,285.71. In this way, the gap fell to 54.5%. The MEP had a slight decrease from $919 (-0.7%) to $1,232.22.

The free dollar, which is a small market and a refuge for savers who see no other alternative in the face of low interest rates, rose $20 (+1.6%) and reached the record of $1,255, placing itself closer to financial dollars.

This week there were two pressures that gave way: that of believing in inflation greater than 200% annually since in the short term there will be devaluation. In fact, the investment bank Goldman Sachs noted that “the measures announced by Javier Milei’s government that aim for a rapid fiscal adjustment in 2024 that results in a balanced budget, are going in the right direction and implementation, which will be critical, “It could be a challenge.”

The bank’s warning goes with the sensitivity of investors who are waiting for congressional approval to be able to operate hands-free.

The other side of the decline in dollars was sovereign bonds that had an excellent round which caused the country risk to fall 43 units (2.2%) to 1,892 basis points.

Juan Martín Yanzón, head of the ConoSur table, pointed out that “the sovereigns started the day offered, but they took on color as the day went by and we noticed demand for Globales, especially GD38 and GD41 made the market stretch a little. spread Legislation (gap) to the 9.5% area.” In other words, bets on foreign-law dollar bonds are growing.

Regarding the BOPREAL, the title that was issued to settle the BCRA’s debt with importers, he said that “they operated evenly during the day in the area of ​​64/65% both locally and abroad and it should be noted that in pesos it was the fifth largest bond operated on ByMA with a volume of almost USD 10 million. In cable (cost of placing or bringing dollars from abroad) it operated less and almost all the tables abroad now indicate demand.”

Meanwhile, local bonds continued to make their adjustment. Those indexed by CER were offered all day and fell more than 1% in the short terms and the one that expires in 2028 collapsed 4.21%. Those that adjust for devaluation continued to decline. TV24, the most representative, lost 0.69%. The duals that evolve due to inflation or devaluation, had their most pronounced decline in the one that expires in April, which lost 1.56%.

Some see their chances with dual bonds reduced because they do not see inflation as high as they expected nor the devaluation as close or of great magnitude.

Meanwhile, in the Free Exchange Market (MLC), the absence of importers was noted and the Central Bank was able to buy USD 189 million of the USD 244 million operated. Reserves, under these circumstances, increased by USD 182 million and reached the highest level of the last three months at USD 24,669 million. It should be noted that ByMA had problems and the system went down for part of the day.

The report from Andrés Reschini’s F2 consulting firm noted that “the lawsuit managed to retain only USD 55 million, a very small amount. Therefore, we will have to see what happens in the successive rounds in which importers may need to recover what may have been left pending from today (yesterday). Last week a drop in Central purchases was noted, but with the numbers shown so far this week, we have not seen a deepening of that trend, although it will have to be followed closely.”

In the futures market, the consulting firm indicated that the amount of business more than tripled that of the previous day, reaching 406,499 contracts. The adjustments were, in general, with slight reds, but without important variations with respect to the closing of the previous week.

The only deadline that went up was May. The curious thing is that at the end of the year it was quoted at $1,916, which means that the few who have buying positions believe that the devaluation in 2024 will be 137%.

Despite all this, the Stock Market had an expected profit taking and the S&P Merval of the leading stocks lost 0.79% in pesos, but gained 1% in dollars due to the drop in the CCL.

The best performing papers were ByMA (+4.32%), Aluar (+3.71%) and Ternium (+3%).

ADRs – certificates of ownership of Argentine shares listed on the New York Stock Exchange – had widespread declines. CEPU (-3.8%) and Telecom (-3.6%) were the victims.

Today, the opinion of the Omnibus Law is expected to be signed, with dissent. If it were to happen, it would be a good sign for the market, which is already discounting it in the price of the dollar.