JULY’S INFLATION PRINT, WHICH ACCELERATED TO 2.1% M/M AND CAME IN ABOVE REM ESTIMATES, set the tone for the local trading session. Argentine assets traded cautiously despite a better tone for emerging market debt overall, as country risk rose and the Merval fell in both peso and dollar terms.
JULY INFLATION ACCELERATED TO 2.1% M/M, above the 2.0% REM projection and June’s 1.9%, breaking a three-month streak of deceleration. Core CPI accelerated to 1.8% m/m (vs. 1.6% m/m in June) and came in below the headline figure, while seasonal items jumped 4.5% on the back of the winter school break. The y/y increase reached 33.8% and the seven-month cumulative figure stands at 19.3%. Within categories, Recreation and culture rose 5.0% and Restaurants and hotels 2.8%, while Food and non-alcoholic beverages held steady at 2.0% and Clothing and footwear fell 1.3%.
DOLLAR BONDS CLOSED MIXED, in a session with a better tone for emerging market debt that failed to spill over into the local curve. The hard-dollar segment ended practically unchanged, with Globales stable and Bonares slipping 0.1%. Country risk added 2 points to 473 bps, its highest level in two months, and has risen 43 points so far in August. The Bopreal in MEP dollars gained 0.2% to 109.98.
PESO CURVES ENDED HIGHER IN USD TERMS, with little differentiation across tenors. CER-linked bonds led with a 1.1% gain, in line with fixed-rate paper, while dual-currency bonds rose 0.9% and dollar-linked bonds gained 1.0%.
THE OFFICIAL EXCHANGE RATE CLOSED PRACTICALLY UNCHANGED AT $1,491.8, up 0.2% so far in August. In the financial segment, the MEP dollar fell 0.7% to $1,510.9 and the CCL fell 1.0% to $1,568.6, with the exchange spread widening to 3.8%. The BCRA bought USD 56 million in the market and gross reserves closed at USD 49,546 million, down USD 80 million on the day; August purchases total USD 249 million and USD 13,586 million year-to-date.
THE MERVAL FELL 0.8% IN PESOS AND 0.7% IN CCL DOLLAR TERMS, to USD 1,894.6, in a session where most sectors declined. Consumer discretionary (-2.4%), materials (-2.1%) and construction (-1.9%) led the declines, while real estate (+1.5%) and industrials (+1.0%) were the top gainers. Among individual names, Banco BBVA Argentina (-3.0%) and Loma Negra (-2.1%) stood out to the downside, while Cresud (+1.6%) and IRSA (+0.9%) led to the upside.
