THE WEEK BROUGHT A BROAD-BASED REBOUND FOR LOCAL ASSETS, despite a global backdrop marked by volatility. Peso-denominated debt rose, with Dual instruments leading the gains, while fixed-rate curve yields rose again. Sovereigns gained ground and country risk compressed below 520 bps, while the Merval broke a four-week losing streak with a rally concentrated in energy and banks. Meanwhile, the BCRA accelerated its pace of purchases, closing the best week of May in a context of higher FX supply beyond the agricultural sector, with the exchange rate remaining stable. The key macro release was the March EMAE, which showed a pickup in activity although sectoral performance continues to display a two-speed dynamic, while wages continue to lag behind inflation. The trade balance closed April with a record surplus, driven by energy growth. The fiscal surplus, on the other hand, fell in real terms due to lower revenue, forcing the government to continue seeking spending cuts to meet its fiscal target. The week's agenda will be shaped by Wednesday's Treasury auction, where the Treasury is expected to continue its strategy of absorbing pesos and extending the maturity profile, as well as the publication of the Government Confidence Index, which posted a sharp decline in April.

THE TRADE BALANCE CLOSED APRIL WITH A POSITIVE BALANCE OF USD 2,711M, the highest on record for that month and the twenty-ninth consecutive month with a favorable result. Exports reached a record USD 8,914M, up 33.6% year-on-year driven by a combined effect of volumes (+20.6%) and prices (+10.8%). Growth was broad-based across all four major categories, with Fuels & Energy leading the advance (+85.9% y/y) at USD 1,554M — accounting for 52% of the total surplus — boosted by higher sales of crude oil and refined fuels. Industrial manufactured goods also posted a significant jump (+43% y/y). Imports totaled USD 6,204M, falling 4.0% y/y due to a decline in volumes (-7.7%), while prices rose 4.1%. Savings on energy imports amounted to USD 84M. On a cumulative basis, total trade reached USD 15,118M in April, up 15.1% y/y.

THE MONTHLY ECONOMIC ACTIVITY ESTIMATOR (EMAE) RECORDED A 3.5% M/M SEASONALLY ADJUSTED GAIN IN MARCH, erasing the declines seen in January and February, driven by Industry, Construction, and Agriculture. The year-on-year variation was 5.5%, with 14 out of 15 sectors in positive territory. Fishing led year-on-year growth (+30.9%), followed by Agriculture, livestock, hunting and forestry (+17.9%) — with the largest contribution — Mining & Quarrying (+16.3%), and Manufacturing (+4.6%). The only sector to contract was Public Administration (-1.2% y/y). With this reading, Q1 would have grown 0.3% quarterly and 1.7% annually. The sectoral performance continues to show a two-speed dynamic: primary sectors and construction are driving growth with double-digit rates, while trade and industry remain in negative territory. Wages, meanwhile, have yet to follow. The Wage Index for March rose 3.0% m/m, falling short of the 3.4% inflation rate. The registered private sector rose just 2.1%, marking 7 consecutive months of real declines, while the public sector rose 5.0% due to teacher seasonality and the informal sector rose 4.7%. In year-on-year terms, wages have accumulated a gain of 36.4% against inflation of 32.6%.

THE DOMESTIC WHOLESALE PRICE INDEX (IPIM) ROSE 5.2% M/M IN APRIL AND 30.8% Y/Y, accelerating 1.8 p.p. relative to the 3.4% recorded in March and doubling the CPI for the same month (2.6%). The increase was driven by domestic products (+5.3%), with the largest contributions coming from crude oil and gas (2.09 p.p.), refined petroleum products (1.63 p.p.), chemicals and chemical products (0.46 p.p.), food and beverages (0.26 p.p.), and rubber and plastic products (0.18 p.p.). Imported products rose 2.5%. The year-to-date cumulative figure reached 11.6%. The Construction Cost Index accelerated to 3.1% m/m and 30.2% y/y, with increases of 2.9% in Materials, 3.1% in Labor, and 3.3% in General Expenses. The year-to-date cumulative figure reached 10.1%.

IN APRIL, THE NATIONAL PUBLIC SECTOR RECORDED A PRIMARY SURPLUS OF ARS 638M, representing a real decline of 44% compared to the same month last year. This was driven by revenues falling 2.6% y/y in real terms, while primary spending rose 1.1% y/y in real terms. The revenue decline reflected lower collections from export duties (-38%), employment-related taxes (-3%), and import tariffs (-15%). On the expenditure side, the increase was driven by a sharp rise in economic subsidies (+88%) and capital expenditure (+69%), along with increases in the Universal Child Allowance (AUH) (+6%) and pensions with supplementary bonuses (+1%). With this result, the primary surplus for the first four months of the year fell 17% y/y in real terms — a decline that would have been larger were it not for extraordinary income from export duties. While the fiscal anchor remains the government's main asset, the decline in revenue and the indexation of a large share of spending forces the government to seek further spending cuts to meet the fiscal target of 1.4% of GDP.

ON THURSDAY, THE PRESIDENT ANNOUNCED A REDUCTION IN EXPORT DUTIES FOR THE AGRICULTURAL AND INDUSTRIAL SECTORS at the 172nd anniversary of the Buenos Aires Grain Exchange, with the Ministry of Economy providing further detail the following day at a press conference. For wheat and barley, the rate will drop from 7.5% to 5.5% starting in June. For soybeans, corn, sunflower, and sorghum, the government will implement a gradual reduction scheme beginning in January 2027 through 2028. Soybeans will decrease by 0.25% per month during 2027 (from 24% to 21%) and 0.5% per month in 2028 (from 21% to 15%). Corn and sorghum will be reduced quarterly from 8.5% to 5.5%, while sunflower will go from 4.5% to 3%. In the industrial sector, export duties for the automotive, petrochemical, and machinery sectors will be fully eliminated: they will decrease by 0.375% per month from July of this year until reaching 0% in June 2027. The Ministry of Economy clarified that the schedule aims to provide certainty and avoid speculation, with a fiscal cost of USD 57M in 2026, USD 530M in 2027, and USD 1,339M in 2028. The measure seeks to incentivize agricultural liquidation in a context of a record harvest and improve industrial competitiveness.

ON WEDNESDAY, THE IMF BOARD COMPLETED THE SECOND REVIEW OF THE EFF PROGRAM FOR USD 20,000M APPROVED IN APRIL 2025, authorizing an immediate disbursement of USD 1,000M that brings total disbursements to USD 15,800M. The IMF highlighted the strengthening of reform momentum with the passage of key fiscal, trade, and labor legislation, along with improvements to the monetary and exchange rate framework that contributed to reserve accumulation and enhanced the country's ability to manage shocks. Directors commended the authorities' continued adherence to the fiscal anchor and supported the goal of achieving a cash fiscal balance in 2026, underpinned by further reductions in energy subsidies, better targeting of social transfers, and containment of discretionary spending. They also valued the BCRA's sustained FX purchase strategy, which has been enabling the strengthening of international reserves.

THE BCRA PURCHASED USD 914M DURING THE WEEK, averaging USD 183M per day and marking the best weekly reading of the month. This brought the May cumulative total to USD 1,840M over 15 business days (USD 123M per day), although still below April's pace, which averaged USD 138M per day. Given that the agricultural sector maintained a liquidation pace of around USD 120M per day, the higher purchases can be explained by corporate bond (ON) settlements and exports from other sectors. Year-to-date, the BCRA has accumulated purchases of USD 8,995M. As a result, gross reserves closed at USD 46,803M, up USD 741M from the previous week's close, while net reserves remain negative at around USD 9,000M.

THE OFFICIAL EXCHANGE RATE EDGED DOWN 0.1% DURING THE WEEK, closing at ARS 1,393.50, sitting 25.2% below the top of the band (ARS 1,744.12). The MEP dollar rose 0.7% to close at ARS 1,435.64, while the exchange rate fell 0.1% to ARS 1,485.92, with the spread at 3.5%. Futures showed limited variation during the week (–0.1% on average), with implied depreciation in the range of 2%–2.1% m/m across the curve, and implied rates hovering in the 25%–28% NAR range. Traded volume closed at USD 1,296M and open interest at USD 4,162M at the week's close.

THE WEEK BROUGHT A BROAD-BASED GAIN IN PESO-DENOMINATED DEBT, with yields trending upward. Dual instruments posted the strongest advance (+0.8%), with spreads over TAMAR in the range of 0.2%–0.8%, implying a TAMAR breakeven of around 22% NAR. Dollar-linked bonds rose 0.8%, with yields of devaluation +3%, implying an exchange rate of ARS 1,426 by June and ARS 1,504 by September, with a breakeven devaluation of 1.8% m/m. CER bonds rose 0.6%, with real rates ranging from CER -12%/-8% at the short end in 2026 to CER +3%/+9% toward 2027–2028; the market is pricing inflation of 2.3% m/m in May, between 1.8% m/m from June to October, and 1.3% m/m from November 2026 to April 2027. Lecaps posted the most modest gain (+0.4%), with the fixed-rate curve decompressing at the short end (from 1.8% EMR to 1.9% EMR), while the long end remained stable at 2.0% EMR.

HARD DOLLAR SOVEREIGN DEBT ADVANCED AN AVERAGE OF 0.9% FOR THE WEEK, in a volatile global environment that nonetheless proved favorable for emerging markets, bolstered by positive macro data and the BCRA's acceleration in purchase pace. Bonds traded in line with regional peers, though outperforming their 0.37% return. Against that backdrop, the spread versus the EMBI Latam compressed by 34 bps to 249 bps, while country risk closed at 514 bps, accumulating a weekly decline of 24 bps. Both Bonares and Globales rose 0.9%, with GD35 and AL30 leading gains at +1.0% and +0.9%, respectively. At current prices, the Bonares curve yields between 7.0% and 10.1%, while Globales offer yields of between 5.4% and 9.4%. The legislative spread between GD30 and AL30 narrowed to 1.6%, from 2.1% the prior week. Bopreales bucked the sovereign trend, falling 0.3% on average, with Bopreal Series 3 leading declines at -1.2%, with yields currently ranging between 4.4% and 7.8%. Sub-sovereigns posted a weekly gain of 0.5%, driven mainly by Buenos Aires 2037, which rose 1.1%; the provincial curve ranges between 5.1% and 11.6%. Corporate bonds advanced 0.1%, led by Argentine law instruments (+0.2%), while New York law issuances were flat; Galicia 2026 stood out in the local segment with a 1.6% gain. Overall, local instruments yield an average of 4.9% and international instruments 7.4%.

THE MERVAL ADVANCED 5.2% FOR THE WEEK IN PESO TERMS AND 5.6% IN DOLLAR TERMS, closing at USD 1,918, outperforming Brazil (0.4%) and LatAm (1.4%). With this, the local equity index broke a four-consecutive-week losing streak. The rally was concentrated in energy — despite a weekly decline in crude oil prices — as well as in banks and construction. Underperformers were communications and consumer staples. The largest individual stock gains came from YPF (9.6%), TGN (8.7%), and Edenor (8.4%), while Mirgor (-6.4%) and Telecom (-6.3%) led the declines. Argentine ADRs rose 4.2% on average, with YPF (9.9%), Ternium (9.8%), and MercadoLibre (7.6%) leading the gains, and Bioceres (-3.5%), AdecoAgro (-2.3%), and TGS (-1.2%) posting the largest drops.

WEEK AHEAD

• Today the Government Confidence Index (ICG) will be published after having registered a sharp drop in April.
• On Wednesday the 27th, the second May auction will take place, where the Treasury will face maturities of $10 trillion with the private sector: the Lecap S29Y6 for $6.5 trillion and the CER letter X29Y6 for $3.5 trillion. The market has abundant liquidity, so the Treasury will likely issue debt above its maturities once again. The offering includes a new Lecap maturing in September 2026 (S15S6) and a new dollar-linked bond maturing in July 2026 (D31L6) as the shortest instruments, while in CER the TZXM7 (March 2027) and TZXS7 (September 2027) will be auctioned, in Duals the TMG28 (August 2028), and in dollar-linked the TZVM7 (March 2027). In dollars, the AO27 and AO28 are offered again, so if the quota is filled, the issuance of the AO27 would be completed.