ON TUESDAY, LOCAL ASSETS HAD A NEGATIVE SESSION, with dollar-denominated sovereigns declining and country risk rising to 511 bps. In the ARS-denominated curves, Bontes, Lecap, CER and Duals posted slight gains, while dollar-linked instruments retreated. Financial exchange rates rose, with both the financial dollar and the MEP dollar closing higher, while the official exchange rate remained stable. The BCRA bought in the official market and added to gross reserves.

TODAY'S TREASURY AUCTION WILL FACE MATURITIES OF ARS 9.4 TRILLION DUE THIS FRIDAY, concentrated mainly in the Lecer X15Y6. The menu on offer includes a fixed-rate instrument (S30S6), two Boncer bonds (TZXY7 and TZXS7 — new issuance), reopenings of the CER/TAMAR Dual bonds (TXMJ8 and TXMJ9), and a dollar-linked instrument (D30S6). In addition, the Bonar AO27 and AO28 bonds are being reopened with a maximum placement of USD 250M per instrument across the first and second rounds. The reopening and new issuance of longer-dated instruments suggests that the Treasury continues its strategy of extending maturities to ease its debt repayment profile, taking advantage of ample liquidity in the system.

AHEAD OF TODAY'S AUCTION, ARS-DENOMINATED DEBT POSTED MODEST LOSSES ACROSS ALL SEGMENTS. Lecap and CER bonds each fell 0.3%, as did Duals, while dollar-linked instruments declined 0.6%. The BCRA's overnight repo stock reached ARS 3.5 trillion on Monday, reflecting ample system liquidity in anticipation of today's auction, with overnight rates hovering around 20% NAR.

DOLLAR-DENOMINATED BONDS CLOSED LOWER, underperforming the broader EM universe, which was also weighed down by the global backdrop. Bonares fell 0.3% and Globals declined 0.4%, with steeper losses of up to 1.0% at the long end, while the short end traded without significant changes. Country risk rose to 511 bps. Bopreal bonds also had a weak session, falling 0.2%.

THE OFFICIAL EXCHANGE RATE FELL 0.9% TO ARS 1,386.53, sitting 24.4% below the upper band ceiling of ARS 1,725.4. The MEP dollar rose 0.3% to ARS 1,424.5, while the financial dollar climbed 0.4% to ARS 1,483.3, bringing the gap between the financial dollar and the official rate to 7% and the MEP-financial dollar spread to 4.1%. The BCRA purchased USD 70M during the session, accumulating USD 536M in May and USD 7,691M year-to-date. Gross reserves rose USD 42M to close at USD 46,185M.

THE MERVAL FELL 1.3% IN PESOS AND 1.6% IN DOLLAR TERMS, closing at USD 1,885. Losses were broad-based, led by telecoms, banks and construction. On the local board, Telecom Argentina (-6.1%), Banco Supervielle (-5.0%) and Cresud (-3.5%) topped the losers, while Sociedad Comercial del Plata (+4.7%) and Aluar (+0.5%) were the only gainers of the session. Among NYSE-listed shares, the average fell 2.1%, with Bioceres (-14.2%), Grupo Supervielle (-4.3%) and Globant (-4.2%) posting the steepest declines, while Vista Energy (+3.3%), MercadoLibre (+1.4%) and Telecom Argentina (+1.3%) led the gains.