The external front set the tone for the week. The Fed hiked rates and long-dated U.S. yields remained at highs, a backdrop that punished hard dollar debt, pushed country risk to a one-month high and dragged down the Merval, which erased its September gains. In pesos the story was different: with the exchange rate and interest rates stable once again, the curve extended its rally and indexed instruments led the way. Behind the FX calm, however, the market continues to adjust: agricultural exporters are settling FX at a solid pace, but the BCRA is buying less and less. The week's data were mixed. Activity confirmed a contraction in 2Q26 and the labor market deteriorated again, while the trade balance once more posted a large surplus, the government sustained its primary surplus and consumer confidence rebounded after two months of decline. On the political front, the 2027 Budget is already before Congress and will serve as a test of the government's ability to build agreements. Next week the focus returns to the peso market: Tuesday's exchange and Friday's fixing will determine how much of the month-end maturity the Treasury ends up paying.
1. Activity contracts
In 2Q26 GDP fell 0.6% q/q, reversing the expansion recorded in the first three months of the year. The decline was driven by domestic demand: private consumption dropped 2.4% q/q, public consumption 2.3% q/q and investment 0.8% q/q, its fifth consecutive quarterly contraction. Net exports provided an offset, with external sales up 2.5% q/q and imports down 3.5% q/q. Against the same quarter of 2025, GDP grew 2.0%, also driven by foreign trade, while domestic demand continued to fall on investment (-4.1% y/y) and public spending (-11.1% y/y). On the supply side, 13 of the 16 sectors expanded, led by mining (16.4% y/y) and agriculture (6.9% y/y), while manufacturing fell again (-2.1% y/y) and construction stagnated.
2. Wholesale prices and construction costs pick up
In August the wholesale price index (IPIM) rose 2.1% m/m, 1.3 pp above July, and 29.8% y/y. The pickup was driven by crude oil and gas, up 8% m/m and contributing 0.7 pp to the headline index, together with a larger increase in imported goods (2.9% m/m) versus domestic goods (2.1% m/m). The construction cost index (ICC) advanced 2.5% m/m and 33.2% y/y, led by labor (3.2% m/m, reflecting the UOCRA wage agreement in force since August), general expenses (2.2% m/m) and materials (1.7% m/m).
3. The fiscal surplus holds
Despite weak tax collection, the government maintained balance through further spending cuts. In August revenues fell 1.2% y/y in real terms —excluding the increase in export duties they would have declined 4.0% y/y— and primary spending 0.5% y/y in real terms, explained by wages, pensions and transfers to provinces. The primary result was a surplus of 0.18% of GDP, practically unchanged from August 2025, and with interest payments down 13% y/y in real terms the financial result came in at 0.05% of GDP. In the first eight months the primary surplus accumulates 1.1% of GDP versus 1.4% in 2025, and the financial surplus 0.2% versus 0.4%.
4. Record trade surplus
The goods trade balance is on track for a record surplus on the back of improved terms of trade and falling imports. In August exports rose 12.4% y/y, driven exclusively by prices (16% y/y) as volumes fell 3% y/y, while imports rose 3.3% y/y, also on prices (11% y/y) against volumes down 7.0% y/y. The balance reached USD 2,200 M, versus USD 1,440 M in August 2025. Year to date the surplus totals USD 18,300 M, more than USD 13,000 M above the same period last year.
5. Consumer confidence improves
After two months of declines, in September the UTDT Consumer Confidence Index rose 2.4% m/m. The improvement was driven by lower-income households (12.3% m/m) and the interior of the country (5.2%), while the City of Buenos Aires (-6.8%) and higher-income households (-4.1%) retreated. By component, Personal Situation advanced 11.3% and Future Expectations 3.8%, although willingness to buy durables and real estate fell 3.4%. The index remains 13.1% below the current administration's peak, reached in January 2025.
6. 2027 Budget
The bill sent to Congress projects growth of 4.0% next year, against 3.0% estimated for this year, with a 9.0% rebound in investment. It assumes inflation of 29% y/y at the close of 2026 and 18% y/y for 2027, and an official exchange rate of ARS 1,600 at year-end and ARS 1,847.6 at the end of next year. On the fiscal accounts, with no major news on tax cuts, it estimates a primary surplus of 1.3% of GDP, equal to that projected for 2026, and a financial surplus of 0.2%.
7. The BCRA buys less and reserves fall
Agricultural exporters continue settling at a solid pace —averaging USD 160 M per day last week— but the BCRA purchased just USD 80 M, or USD 16 M per session. At that pace, September would close with purchases of roughly USD 320 M, less than half of August and far from the USD 2,000 M monthly average accumulated in the first seven months of the year. Intervention was not enough to offset payments to international organizations and other net operations, and international reserves fell USD 671 M over the week, closing with a gross stock of USD 49,798 M.
8. Exchange rate and rates stable
The lower level of BCRA purchases contains pressure on the official exchange rate, which closed the week at ARS 1,512.3, 0.2% above the prior Friday and 26.9% below the top of the band, currently at ARS 1,919.6. Financial dollars did not follow: the MEP was virtually unchanged at ARS 1,538.2 and the CCL eased 0.5% to ARS 1,589.5. The CCL spread over the official rate thus compressed to 5.1%, with the swap at 3.3%.
9. The peso curve extends its rally and indexed instruments lead
With liquidity normalized and rates stable, every segment closed in positive territory. TAMAR bonds and DL/TAMAR duals led, both up 1.6%, followed by CER/TAMAR duals (1.4%) and CER bonds (1.1%). Further back, dollar-linked instruments advanced 1.0% and fixed rate came last at 0.7%. At current prices Lecaps and Boncaps yield between 1.8% and 2.2% TEM. The CER curve trades between CER+1.5% and CER+3% in the 2026 tranche, between CER+3% and CER+7.5% in 2027 and near CER+9.5% from 2028 onward. Dollar-linked bonds yield an average of 5.5% over devaluation, compressing nearly 1 pp on the week, while TAMAR instruments show an average spread of 4.6% over the reference rate and CER/TAMAR duals 9.1%.
10. The Treasury moves to swap the September Lelink
The Finance Secretariat announced the conversion of the D30S6, the dollar-linked bill maturing on September 30, with an outstanding amount of USD 4,397 M as of today. The operation will take place this Tuesday the 22nd, settling T+3. The menu is mostly short: Lelinks maturing October 30 (D30O6) and November 30 (D30N6), plus the dollar-linked bond due June 2028 (TZV28) as the only long option. The swap targets USD 3,597 M, as we estimate that roughly USD 800 M of the total is held by the BCRA and will be rolled over in full. Assuming participation similar to the previous operation, around 35%, the D30S6 maturity profile at the fixing date would stand at USD 2,338 M, slightly below the USD 2,595 M of the D31G6 fixing.
11. Hard dollar debt falls and country risk decouples
Dollar-denominated debt lost 1.1% on average on the week, with Globales (-1.4%) hit harder than Bonares (-0.9%) and the entire long end in the red. The damage was concentrated at the long end, with the AL35 down 2.8%, while the short end cushioned the blow, with the AL30 losing 0.4%. The driver was external: the Fed hiked 25 bps on Wednesday and long-dated U.S. yields remained at highs, an adverse backdrop for emerging market credit that not even the easing of tensions in Hormuz and lower oil prices could offset. Country risk closed at 524 bps, 39 bps above the prior Friday and at its highest level in a month, after five consecutive sessions of increases. At current prices Bonares yield between 3.9% and 11.2% and Globales between 6.2% and 9.8%. BOPREALs held up better, down 0.2%.
12. The Merval erases its monthly gain
The Merval fell 2.6% in dollars and closed at USD 1,890, turning September negative (-0.3%) and bringing the year-to-date decline to 6.5%. Losses were broad-based: consumer discretionary lost 6.3%, financials 4.0% and utilities 3.2%, with only communications (2.5%) and consumer staples (0.8%) closing in positive territory. Within the leading panel, declines were led by Mirgor (-11.2%), Pampa (-5.6%), Supervielle (-4.9%), TGS (-4.8%) and Galicia (-4.7%), while Transportadora Gas del Norte (8.1%), Cresud (4.3%) and Telecom (3.1%) were the exceptions.
What's ahead
The macro calendar brings two INDEC releases. Tuesday brings the July wage index, which has been running behind inflation and helps explain the weakness in private consumption reflected in second quarter GDP. Thursday brings the July EMAE, the most relevant data point of the week after weak industrial and construction figures. Friday closes with the BCRA's August FX balance, which will shed light on where the demand that prevents larger purchases is leaking through despite the solid pace of agro settlements. The financial focus, however, will be on the peso market: Tuesday brings the bids for the September Lelink swap, Thursday the Treasury publishes the terms of Monday the 28th's auction, and Friday defines the D30S6 fixing, which will set the final size of the month-end payment.
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