Oil deflates abroad; at home, credit fails to follow. The week ran in two opposite directions. Brent spot fell 18.6%, from USD 120.2 to USD 97.8 per barrel, bottoming at USD 91.8 on Wednesday the 4th, the first session after the Democratic victory in the US midterm elections. In futures, the drop was around 16%, the largest weekly decline since 2020 according to LSEG data cited by Reuters. Over the same period, country risk rose from 787 to 939 bps, its highest since October 2025, and Bonares and Globales lost 6.0% and 5.7%, respectively. The slide in crude continued after the week closed: on Tuesday the 10th, Brent traded at USD 89.94, some USD 30 below its October 30 level.
Our reading is that the world received first-order disinflationary news and Argentina was unable to capitalize on it. Oil opens a path for global inflation to ease and for rates to stop rising; Argentine credit, by contrast, remained tied to a question of its own about what happens after 2027, and the Treasury had to step into the peso curve to preserve its main source of financing.
International outlook: the vote that brought oil down. What happened. Democrats won Tuesday's elections by a wide margin. CBS projects around 256 seats in the House of Representatives, compared with 214 in the current Congress, and at least 54 in the Senate, with Mississippi and Alaska still counting. The market read the result as a political limit on the war with Iran, which Vice President Vance himself pointed to as the cause of the defeat. Crude fell 8% on Wednesday and premiums on Middle Eastern grades returned to pre-conflict levels. Attacks on vessels in the Gulf serve as a reminder that no agreement has been signed yet.
How we read it. The drop in oil is the best inflation news in months: it lowers fuel and transport costs and, with a lag, tempers expectations. If Brent holds below USD 100, US headline CPI should decelerate in the coming months. But the Fed is not guided by energy alone. Friday's employment report showed 165,000 new jobs in October, against roughly 60,000 expected, unemployment at 4.1% and wages up 3.1% y/y. The implied probability of a December hike rose from 70% to close to 77%, and the 10-year yield traded around 4.87%. Oil does not prevent a December hike, but it changes the debate: from how many hikes are needed to whether December will be the last. If energy disinflation is confirmed in the October and November data, the hawkish bias should lose strength in the first quarter of 2027 and open room for lower long-term rates.
The impact on Argentina comes through three channels pointing in different directions. The first is favorable: a lower base rate reduces the cost of refinancing 2027 maturities. The second is mixed: Argentina is now a net energy exporter, so a lower Brent subtracts dollars from the trade balance and hurts companies in the sector, as shown by the 7.2% drop in YPF's ADR on Wednesday. The third, political, dominated the week. With an opposition-controlled Congress, new assistance from the US Treasury remains possible, since the Exchange Stabilization Fund does not require legislative approval, but its political cost rises. The market lowered the probability of having a lender of last resort, and that weighed more than the relief from oil.
Argentine outlook: the Treasury caps the peso curve. Dollar credit decoupled. Country risk rose 152 bps over the week and posted six consecutive sessions of increases. More revealing than the level is the shape of the curve: 2027 bonds held up while 2028 yields spiked. By our calculations, the implied dollar forward rate between the AO27 and the AO28 reached 26%, compared with 11% in mid-July. The market is not questioning the 2027 payment; it is charging for what comes after the presidential election, when maturities with private creditors and multilateral lenders concentrate and financing still lacks a defined source.
The intervention in pesos. On Wednesday the 4th, the hardest-hit peso bonds rose as much as 4.3% in a single session, with peso fixed income volume above $3 trillion, roughly three times the average. The real rate on the 2029 dual bond fell from 8.3% to 6.8%, and long duals went from yielding TAMAR plus 11.1% to TAMAR plus 10%. There was no announcement, but the notice adjusting listed amounts published on BYMA on Thursday the 5th, at the request of the Ministry of Economy, confirms the buyer was the Treasury: it adjusted the face value of eight securities, four CER/TAMAR duals maturing between December 2028 and June 2030 and four CER zero-coupon bonds due 2028 and 2029, the same instruments that led the rally. Part of the gain was given back the following day, with no further purchases.
How we read it. The intervention follows a clear logic. November concentrates peso maturities estimated at around $40 trillion, and Wednesday the 11th's auction seeks to place debt maturing after 2027. With the long end at TAMAR plus 11%, the Treasury would have had to choose between validating real rates incompatible with the recovery in activity or shortening tenors toward the electoral calendar. By capping the long end of the curve, the Government is defending its main source of financing, the local peso market, just as external access becomes more expensive.
The cost is that the injected pesos need somewhere to go. Overnight repo rates topped 30% on Wednesday before closing near 22%: the operation eased liquidity tensions, but with persistent portfolio dollarization those pesos could end up feeding demand for hedging. For now the exchange rate does not reflect it: the official rate rose 0.5% on the week and the contado con liquidación closed at $1,679. The calm also has intervention behind it: the BCRA only bought foreign currency in the last three sessions, around USD 26 million per day, and traders point to official selling in futures and dollar-linked instruments.
The Pope's visit. Leo XIV arrived on Sunday the 8th, the first papal visit since 1987, and Monday the 9th was a national holiday, with no trading in the local market. Before the President, he asked that "the economy be at the service of the person and not the person at the service of the economy," and that growth also reach "those who face the greatest difficulties." It does not move prices in the short term, but it adds pressure to the electoral agenda.
Outlook: external relief, an internal test. What changed. Oil stopped pressuring global inflation and the market began pricing in a negotiated end to the conflict with Iran. In Argentina, risk stopped being regional, as it was last week with Brazil, and became its own, concentrated in the post-2027 segment.
What we expect. Abroad, a Fed hike in December that the market could read as the last one if inflation data already reflect the drop in energy, with long-term rates stable or slightly lower. At home, country risk that is unlikely to return below 800 bps without a concrete announcement on 2027 financing. We maintain our preference for the short end of the dollar curve, where the market does recognize repayment capacity, and for CER coverage in pesos.
Risks. On the upside: the signing of an agreement with Iran that anchors Brent around USD 90 or below, US inflation data confirming the slowdown, and an official definition of the source of 2027 dollars. On the downside: a rebound in crude if negotiations fail, a Fed signaling more than one hike, and the pesos poured into the curve migrating to the financial dollar, which would force a choice between rates and the exchange rate.
What to monitor. Wednesday the 11th's auction is the first test: a rollover above 100% with placements beyond 2027 would validate the strategy; a low one, or one concentrated in short tenors, would indicate that the rate cap is being sustained with money issuance. Also, October CPI in the US and in Argentina, the final Senate count in Mississippi and Alaska, the 2027 Budget, scheduled for the floor on November 25, and the Fed meeting on December 8-9. If country risk falls with the Treasury out of the curve, the market will have validated the strategy; if it only holds while the Treasury is buying, the intervention will have bought time, not credibility.
