LULA'S RUNOFF WIN RATTLED ARGENTINE ASSETS, as hard-dollar sovereigns slumped and pushed country risk above 760bp, while EM debt barely budged. The CCL jumped and widened the swap spread, and the peso curve posted broader losses in USD terms, with dollar-linked notes no longer the exception. Equities took a hard hit, both in the Merval and the ADRs.
THE TREASURY SET THE TERMS FOR WEDNESDAY, OCTOBER 28 AUCTION, facing maturities of around ARS 10.8 trillion, of which USD 1.452bn correspond to dollar-linked instruments. The menu includes a new LECAP maturing February 2027 (S26F7), two CER bonds maturing March and October 2027 (TZXM7 and TZXO7), a TAMAR bond maturing August 2027 (TMG27), a CER/TAMAR dual maturing December 2028 (TXMD8), and a dollar-linked note maturing January 2027 (D15E7), aimed at refinancing the FX-linked tranche.
DOLLAR BONDS FELL 1.9% ON AVERAGE, well above the 0.2% decline in EM debt, hit by Brazil's election result. Bonares dropped 2.0% and Globales 1.7%. The steepest losses were in the belly and long end, down between 2% and 3%, while the short end of the Globales eased around 1.0%. Country risk jumped 58bp to close at 765bp. Bopreal, by contrast, ended virtually unchanged.
PESO CURVES CLOSED LOWER ACROSS THE BOARD IN USD TERMS, led by TAMAR and CER/TAMAR duals, down 3.2%, followed by fixed rate and CER, down 3.0%, with somewhat more pressure on the long end. Dollar-linked notes also slipped 2.3% in USD terms, as the CCL jump outpaced their FX-linked gain, even as short-dated paper outperformed on stronger demand for currency hedging.
THE OFFICIAL EXCHANGE RATE ROSE 0.8% TO $1,540.5, taking October's gain to 1.5%. In the financial segment, the MEP climbed 0.8% to $1,574.1, while the CCL jumped 2.9% to $1,683.4, pushing the swap spread to 6.9%. The central bank bought no FX on the day, leaving its October tally at USD 1.252bn and USD 15.832bn year-to-date. Gross reserves rose USD 278mn to USD 50.481bn.
THE MERVAL FELL 3.2% IN PESOS AND 5.0% IN CCL DOLLAR TERMS, in a broadly negative session where only one stock managed to close higher in USD terms. On the local panel, IRSA, Mirgor and BYMA stood out, up 9.0%, down 1.5% and down 3.5% respectively, while the steepest losses were in BBVA (-9.2%), Supervielle (-9.1%) and Telecom (-8.5%). On Wall Street, ADRs tumbled 4.9% on average. The smallest declines were in Adecoagro (-1.1%), Globant (-1.8%) and Corporación América (-2.3%), while Supervielle (-9.1%), Mercado Libre (-8.6%) and Telecom (-8.3%) led the drop.
THE UTDT GOVERNMENT CONFIDENCE INDEX ROSE 0.9% M/M IN OCTOBER TO 39.0%, a mild rebound after September's 5.9% drop to 38.8%, the low point of Javier Milei's presidency. The index has hovered around 40% since April. Year-to-date it is down 20.7%, and down 7.0% year-on-year. In month 34 of his term it remains above Mauricio Macri (35.2%) and Alberto Fernández (25.6%) at the same stage, while the administration's average confidence slipped again to a fresh low of 46.6%.
