The week brought solid fundamentals: fiscal balance holds, inflation eases, the trade surplus improves, and the approval of World Bank and IDB guarantees reinforced the credibility of the financial program ahead of the second half. Consumer confidence also improved. In this context, country risk extended its compression streak, consolidating the improvement initiated with the re-rating, while the Merval fell dragged down by energy stocks. Despite lower inflation and stable interest rates, the exchange rate rose again and the BCRA's pace of FX purchases continued to slow. This week, the focus will be on Friday's Treasury auction, where the Treasury will face large maturities and will need to show whether it can continue extending its maturity profile amid greater FX pressure and reduced carry appetite.

THE FISCAL SURPLUS IS NON-NEGOTIABLE. The National Public Sector closed May with a primary surplus of ARS 1.9 trillion and a financial surplus of ARS 0.5 trillion, following net interest payments of ARS 1.4 trillion. In real terms, the primary result fell 14.9% y/y and the financial surplus contracted 45.7% y/y. Revenues declined 4.1% in real y/y terms, driven by a 2.4% y/y drop in tax revenues — the nearly 30% y/y rise in income tax receipts from higher corporate advance payment rates was more than offset by declines in activity-linked and foreign trade revenues — while non-tax revenues dropped 22% y/y. Primary spending fell 2.2% in real y/y terms — highlights included a 40% y/y drop in transfers to provinces, 28% y/y in public works, 20% y/y in subsidies, and 4% y/y in wages, while social benefit spending remained flat. With this result, in the first five months of the year, the NPS accumulated a primary surplus of 0.7% of GDP and a financial surplus of 0.2% of GDP — half the IMF's annual target — slightly below the same period last year.

CONSUMER CONFIDENCE RECOVERS GROUND. The Universidad Torcuato Di Tella consumer confidence index rose 6.4% m/m in June to 42.7 points, the largest monthly increase since November 2025. This marks the second consecutive monthly gain. The improvement was broad-based: Greater Buenos Aires led (+10.0%), followed by CABA (+4.8%) and the Interior (+2.1%). On an annual basis, the index is down 6.1% versus June 2025 and stands nearly 10 points below the current administration's peak reached in January 2025.

MULTILATERAL GUARANTEES APPROVED. The World Bank board approved on June 16 guarantees totaling USD 2.0 billion (via IBRD and MIGA), and the IDB formalized an additional USD 500 million guarantee on June 17. The mechanism does not involve direct lending from the multilaterals: the guarantees back loans that Argentina will take from private banks — with JPMorgan, Citi, Bank of America, and Santander among the arrangers — at an estimated cost of around 6%, well below the 9%+ that a direct market placement would imply, and with a six-year term including three years of grace. However, these guarantees will not be used for July's USD 4.2 billion maturity, which the Treasury plans to cover with its own resources: USD 3.2 billion from the Bonar 2027 and 2028 placements, plus up to USD 365 million additional from next Friday's auction. The remaining approximately USD 1.0 billion would be covered by purchasing dollars from the BCRA. The guarantees are thus reserved for capital maturities with the IMF in the second half of the year and to strengthen the 2027 financial program. The transaction reinforces external credibility amid country risk compression and supports the roadmap toward voluntary capital markets.

RECORD TRADE SURPLUS. In May, the goods trade balance continued to improve driven by the surge in export values and a decline in imports. The fifth month of the year recorded a surplus of USD 3,504 million — a nominal all-time high — far exceeding May last year's USD 607 million. This remarkable improvement was driven by exports jumping 34% y/y to USD 9,537 million — boosted by an 18% y/y rise in volumes and a 13.9% gain in prices — while imports fell 7.0% y/y to USD 6,033 million, explained by a 13.6% decline in volumes partially offset by a 7.6% y/y rise in prices. As has been the trend throughout the year, the energy sector stood out: exports surged 167% y/y — oil was the most exported product for the entire month — while imports fell 33% y/y, yielding a surplus of USD 1,543 million, more than four times that of a year ago. Other sectors contributed equally, generating a surplus of USD 1,960 million versus USD 260 million in May 2025. Year-to-date, the cumulative trade surplus reached USD 11,800 million compared to USD 1,900 million a year ago, as exports totaled USD 40,359 million (+24.3% y/y) and imports USD 28,575 million (-6.6% y/y).

THE PACE OF PURCHASES CONTINUES TO SLOW. In the third week of the month, the BCRA purchased USD 233 million in the FX market, averaging USD 58 million per day — compared to USD 87 million in the two prior weeks — with the agricultural sector contributing USD 560 million. So far in June, the BCRA is averaging net purchases of USD 79 million per day, well below the USD 138 million average during April and May. The slowdown was not driven by lower agricultural settlement, which actually accelerated from USD 130 million to USD 145 million per day, but rather by a decline in financial dollar inflows and an increase in demand. These interventions did not offset losses from the decline in gold prices and other operations, leaving gross reserves down USD 51 million on the week and closing at a gross stock of USD 47,368 million.

THE OFFICIAL EXCHANGE RATE ROSE 2.1% ON THE WEEK, accumulating a 3.5% gain month-to-date and closing at ARS 1,460.25 — 23% below the band ceiling (ARS 1,790). This move tracked the broader strengthening of the dollar globally. Financial exchange rates also advanced: the MEP (GD30) rose 1.9% to ARS 1,479 and the parallel rate gained 1.5% to ARS 1,518, with the spread compressing to 2.6%. Futures followed to a lesser extent, with a weekly average variation of +1.4% and an implied devaluation in the range of 1.7%–1.8% m/m. Trading volume closed at USD 1,169 million and open interest at USD 3,331 million.

FX PRESSURE WEIGHS ON CARRY, as exchange rate stress and fading carry trade appeal dominated the pulse of peso-denominated assets. Dollar-linked bonds led the pack, rising 0.8%, in line with the official exchange rate move, and yielding devaluation +5% on average. Dual bonds slipped 1.0%, with spreads over TAMAR in the -0.3%–1.3% range. Lecaps fell 1.1%, with the curve operating in the 1.8%–1.9% EMR range, decompressing at the short end. CER bonds declined 1.4% on average, pushing yields higher at the short end, with the curve in negative territory through September (between CER -3.4% and CER -3.2%), turning positive from October onward and rising to CER +7.9% at the long end. Implied inflation stands at 1.6% m/m between June and October, accumulating 28.2% in 2026, and decelerates to 1.4% m/m between November and next April. In dollar-linked terms, the market is pricing in only 0.2% direct devaluation in June (implied exchange rate of ARS 1,463, roughly in line with current levels), with an implied devaluation of 1.5% m/m on average through September (implied exchange rate of ARS 1,538).

COUNTRY RISK CONTINUED TO FALL. Hard dollar sovereign debt rose 0.1%, extending its positive streak for a second consecutive week, though at a considerably more moderate pace than the prior week, when the credit re-rating had driven gains of up to 3.6% at the long end. Comparable bonds gained 0.3%, outperforming local law paper. The backdrop featured a deceleration in BCRA FX purchases alongside a weekly gain in the exchange rate. Country risk closed at 429 bps, compressing 14 bps from the prior week, while the spread versus the EMBI Latin America narrowed just 5 bps to 182 bps — a far more modest adjustment than the prior week. In yield terms, Bonares offer rates between 6.6% and 9.3%, while Globales yield between 5.4% and 8.7%. BOPREALs closed the week down 0.1%, dragged by a 0.3% decline in BOPREAL Series 1 C and D; at current prices, BOPREALs yield between 4.2% and 7.1%. Sub-sovereign bonds gained 0.2%, in line with the sovereign, led by Buenos Aires 2037 (+0.2%) and Mendoza 2029 (+0.2%); sub-sovereigns yield between 5.3% and 10.8%. Corporate bonds rose 0.3% on the week, driven by New York Law instruments. Under foreign law, Edenor 2030 led with a 1.2% gain, while under Argentine law, Vista 2026 was the standout with a 1.5% advance. NY Law corporates offer an average yield of 7.2%, versus 4.7% for local law bonds.

THE MERVAL FELL 1.8% IN PESOS AND 3.4% IN DOLLAR TERMS ON THE WEEK, pulling back after the prior week's strong rally. Performance was in line with a more adverse backdrop for Latam and Brazil, which posted weekly declines of 2.7% and 3.9%, respectively. At the sector level, financials were the only segment to close in the green, while energy, communications, and industrials led the declines. Among local stocks, the biggest gainers were Bolsas y Mercados Argentinos (+1.7%), BBVA (+1.2%), and Supervielle (+0.8%), while Telecom (-10.4%), YPF (-10.0%), and Holcim (-7.3%) were the worst performers. For stocks listed in New York, the average decline was 3.8%, with BBVA (+6.2%), Corporación América (+4.2%), and Grupo Supervielle (+3.5%) as the positive exceptions, while AdecoAgro (-20.7%), Globant (-18.0%), and Bioceres (-11.2%) posted the steepest losses.

WEEK AHEAD

  • Next week's agenda combines macro data and the Treasury auction. On Tuesday the 23rd, the April Wage Index will be published — wages have been lagging inflation, and the reading will confirm whether the trend holds in a context where activity has yet to fully recover.
  • On Wednesday the 24th, INDEC publishes the Balance of Payments for Q1 2026.
  • The Treasury auction terms will also be announced, with the auction taking place on Friday: ARS 16.2 trillion matures following the Treasury's conversion of TZV26, which swapped 58% of that position into July dollar-linked bonds, leaving USD 2,050 M of those instruments coming due, of which approximately half are held by the BCRA. The key questions will be whether the Treasury again offers dollar-linked instruments to contain FX pressure — it has been increasing its exposure to these instruments to provide market coverage and reduce its futures short position — and whether it can continue extending its maturity profile in a high-volume auction. Post-maturity FX dynamics will be the key variable to watch.

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