2024-07-05 22:28:00
he risk country from Argentina displayed a a big drop of 113 basis points this Friday (-8.1%) after the holiday in the United States, with a business conference limited to Wednesday the 3rd and a holiday on the 4th of July, to celebrate Independence Day in that country.
he The JP Morgan indicator was at 1,406 points Basics, the lowest level since June 20, and accumulated a drop of 49 points during the week from 1,455 units the previous Friday.
Apart from the indicator’s adjustment for the previous holidays, the sharp drop in the JP Morgan investment risk index was not due to the behavior of the prices – and therefore the yield rates – of Argentina’s public securities, but certainly due to a adjustment in the composition of the bonus menu used for this measure, which calculates the rate gap between US Treasury bonds and similar emerging issues.
Although not formally communicated, similar situations occurred on other occasions. Other emerging market indices fell similarly to the local one, albeit to a lesser extent (with lower bases as well).
“Outside, bails have not gone up in practice. I’d say they dropped a bit compared to July 3rd (yesterday was a holiday in the US). Today the country risk should increase. Maybe that maybe that technicality, by building a portfolio. Because the 2030 bond has more weight and it’s the one that’s clipping the coupon, the one that’s amortizing, it’s changing era and that has an impact. In any case, it is a matter of calculation. Today the risk of the country has not really fallen,” he said About Javier Casabal, from Adcap Grupo Financiero. On Tuesdays the Global pays 30 coupons and that coupon cut could be an explanation for what happened today.
Country risk or “Embi+” is a risk indicator. In general, it measures the yield differential between US Treasury bonds, which are considered the lowest risk, and bonds of other countries. However, the calculation is not linear. To evaluate it, portfolios of bonds with maturities in different terms are used. And, based on the rates of these papers, the indicator is prepared.
In general, it is calculated based on a subset of bonds, only those governed by international law and with era (term) more than two years. They are usually a type of market thermometer. When using different bonuses, you have to take into account the rate of each one. These different rates, with different maturity dates, are called the “yield curve”. So, for example, if the price of an Argentine bond falls, its rate of return rises. This is because, assuming it is paid, the debt to be paid is always the same, so a cheaper market price implies a better future yield, a better rate, higher yield.
Los dollar bonds of Argentina to mention this Friday with a average low margin 0.1%, which did not affect the change in the country’s risk index. In the same sense, US Treasury bonds showed reductions in their yields in a range of 5 to 10 basis points in securities from 2 years to 30 years.
In this sense, the country risk also decreased for other economies that make up the index, such as Brazil (which fell by 6 units or 2.5% to 230 basis points) or Mexico (-4 units or 2.2%, to 178 base point).
Argentina’s country risk fell by around 500 points in 2024 from 1,908 points at the end of 2023, although it was well beyond this year’s lows, at 1,143 points on April 22.
Argentina’s country risk returned to the area of ​​1,400 points, at least in two weeks
Stock market agents are still waiting for the adjustments in the economic course implemented by the ultraliberal president Javier Mileyfollowing recent turbulence in the domestic financial market.
“There are some dark clouds on the horizon to watch closely,” reported the SBS Group. “we keep”view‘ optimistic in the medium term in ‘Equity‘(shares), although we emphasize the value of carefully selecting papers at this level of the Merval index,’ they said from the entity.
Among speculative purchases, the initial stock benchmark S&P Merval gained 1% to close at 1,629,029 pointswhile sovereign bonds in the Electronic Open Market (MAE) fell by an average of 0.2% in pesos.
Analysts declare that a reduction in country risk is a condition for the Government to be able to place debt in dollars in the international markets again.
“Regarding volatility in Argentina, it is uncertain in the short term, with prices going in a sideways direction, however, in the medium and long term its trend (Merval) continues upwards above the 200 moving average,” said Rava Bursátil.
The Economist Federico Sturzenegger He was appointed Minister for Deregulation and Transformation of the State to adapt the government organization in line with the process of reducing public expenditure and increasing efficiency, the official bulletin said.
On the other hand, details are awaited to be announced on a new Monetary Regulation Letter through which remuneration liabilities will be transferred from the Central Bank to the Exchequer, a situation which has generated more liquidity in the market due to the dismantling of bank and exchange positions. pressures.
Analysts said based on data from the BCRA, about 1.9 trillion pesos were released on Monday to release jobs in ‘put‘, that is, put options that banks have and can exercise at any time. “Disarming theput‘ obligates the BCRA to issue pesos and buy securities held by those banks,’ an analyst explained to Reuters.
Amidst the uncertainty regarding the new measures, conditions are being awaited for the Treasury’s securities offering next week when approximately 1.05 trillion pesos will expire.
“This auction will take place where the market expects it after the announcement of the Monetary Regulation Letter which, according to the authorities, will dictate the reference rate of the economy,” he said. Personal Investment Portfolio.
“While we await these definitions regarding economic policy, we ask ourselves, what strategy will the Ministry of Economy adopt? Will you continue to offer minimum rates? Today’s statement will answer these questions,” he said.
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