TREASURY AUCTION TAKES CENTER STAGE IN A SESSION OF RENEWED PRESSURE ON DOLLAR ASSETS, the Treasury comfortably rolled over maturities, extended duration with the CER/TAMAR dual bond, and met strong demand for FX hedging. Sovereigns kept correcting and country risk rose again, while emerging market debt eased only slightly. The peso curve held steady, financial dollars fell and narrowed the spread, and the Merval ended lower, with energy names acting as a safe haven.
TODAY'S AUCTION SAW THE TREASURY ALLOT $11.55 TRILLION AGAINST $10.80 TRILLION IN MATURITIES, for a 107% rollover rate and net financing of $0.75 trillion. With this, October closes with a cumulative rollover of 116%. The highlight was the extension of terms: the CER/TAMAR dual bond TXMD8 (Dec-28) took 31% of the amount awarded at 6.21% EAR CER, in line with the secondary market, pushing the weighted average term out to 11.7 months. There was also strong demand for FX hedging: the D15E7 was awarded $2.53 trillion at 7.00% EAR, with the Treasury conceding a premium of about 95 bps over the curve. The Lecap S26F7 cut at 2.10% EMR, in line with the secondary market, amid ample liquidity.
DOLLAR BONDS FELL 1.1% ON AVERAGE, A STEEPER DECLINE THAN THE MILD CORRECTION IN EMERGING MARKET DEBT, Bonares retreated 1.2% and Globales 1.0%, with the pressure concentrated in the belly and long end of the curve, both down 1.2%, while the short end was limited to a 0.4% decline. Country risk rose 10 bps to close at 763 bps. Bopreal fell 1.0% in MEP dollar terms, with steeper losses in the longer maturities.
PESO CURVES ENDED HIGHER IN USD TERMS, WITH GAINS ACROSS CPI- AND RATE-LINKED INSTRUMENTS, dollar-linked and TAMAR-linked bonds advanced 1.8%, in line with the hedging demand seen at the auction, followed by CER bonds at 1.7%. CER/TAMAR duals and fixed-rate paper gained 1.6%, while within Lecaps and Boncaps the short end edged higher and the long end rose 1.3%, steepening the curve somewhat in USD terms as well.
THE OFFICIAL EXCHANGE RATE FELL 0.1% TO CLOSE AT $1,538.7, bringing its October gain to 1.4%. In the financial segment, the MEP dollar fell 0.7% to $1,563.0 and the CCL dollar dropped 1.6% to $1,656.2, leaving the spread at 6.0%. Separately, the Central Bank made no FX purchases in the session, bringing its October total to USD 1,252 million and its year-to-date total to USD 15,832 million. Meanwhile, gross reserves rose USD 21 million to close at USD 50,601 million.
THE MERVAL FELL 1.3% IN PESOS AND 1.3% IN CCL DOLLAR TERMS, in a session where energy names supported the index while banks and telecoms weighed it down. On the local panel, the biggest gainers were YPF (+3.5%), Banco de Valores (+2.2%) and Pampa Energía (+1.8%), while the sharpest decliners were Telecom (-3.0%), BYMA (-2.9%) and Supervielle (-2.7%). On Wall Street, ADRs fell 0.8% on average. Bioceres (+4.8%), YPF (+1.8%) and Vista (+1.0%) rose, while Supervielle (-4.2%), Telecom (-4.0%) and Galicia (-3.7%) led the declines.
