Holding up. Local markets showed stability and some resilience during the week, even amid the global conflict, which did not significantly disrupt domestic performance. Local currency debt stood out, particularly CER-linked bonds, supported by an inflation print above expectations. This was also accompanied by the Treasury auction, in which it managed to refinance more than 100% of its obligations while extending the maturity profile of local currency debt. Although the S&P Merval has had a poor performance so far this year, it recorded a slight rebound driven by energy sector equities. However, country risk continues to show no relief and is approaching 600 bps, despite the Central Bank of the Argentine Republic continuing to purchase reserves, albeit affected by the global backdrop. This dynamic took place alongside an exchange rate that deepened its decline and inflation that accelerated again, raising concerns about the persistent drop in the real exchange rate and its implications for competitiveness. This week several relevant macro data points will be released, including the February fiscal result, the construction cost index—which will provide signals on price dynamics in a still-high inflation environment—and the trade balance result.

Inflation accelerates again. The National CPI for February increased 2.9% m/m—its ninth consecutive rise—bringing the year-over-year rate to 33.1% y/y. Core inflation accelerated to 3.1% m/m, the highest since May of last year, increasing by 0.5 p.p. relative to January. Among components, regulated prices rose 4.3% m/m, mainly driven by a 12% increase in electricity, while fuels (+1.6%) and public transportation (+3.6%) partially moderated the rise. Meanwhile, seasonal prices declined 1.3% m/m. Across divisions, the largest increases were recorded in housing and fuels (+6.8%) and food and beverages (+3.3%), while alcoholic beverages (+0.6%) and the textile segment posted the smallest increases. The persistence of elevated inflation could deepen the decline in the real exchange rate, which has already been deteriorating since the beginning of the year.

The BCRA keeps buying. Over the past week, the Central Bank of the Argentine Republic purchased USD 295 M, bringing total acquisitions for the month to USD 586 M. This implies a daily average close to USD 59 M, suggesting a moderation relative to February, when the pace of purchases averaged around USD 86 M per day. These operations were more than offset by the decline in foreign-currency reserve requirements—resulting from the drop in USD deposits—and by lower gold prices. With these movements, gross international reserves fell by USD 352 M during the week and closed at USD 45,659 M, while net reserves remain negative at around USD 20,000 M.

The exchange rate decline deepens. The official exchange rate fell 1.5% during the week and closed at $1,392.98, standing 16.9% below the upper bound of the band. Financial dollars declined to a lesser extent: the MEP fell 0.1%, while the CCL rose 0.2% and closed at $1,424.4 and $1,473, respectively, with the spread widening to 3.4%. Despite a more adverse international environment and a stronger global dollar, the exchange rate has remained stable, supported by the continuation of carry trade strategies and a solid flow from the agricultural sector, which settled USD 450 M during the week. This dynamic allowed the Central Bank of the Argentine Republic and the Treasury to avoid interventions, even as the central bank continued purchasing foreign currency. However, if this trend persists, the decline in the real exchange rate could deepen. Year-to-date it has fallen 7.6% and has already reversed 17% of the improvement achieved in September last year, weakening competitiveness and generating additional pressure on the external front.

The Treasury finances at lower rates. Last week, the Treasury conducted the first auction of the month, facing maturities of ARS 9.6 trillion and achieving a rollover of 108% of its obligations, thereby absorbing roughly ARS 0.8 trillion from the system. Although the average rate validated was slightly above the market curve, financing costs moderated relative to the previous auction: the average rate for Lecaps declined to 31.1% NAR (2.6% EMR), from 33.5% NAR (2.8% EMR) in February. In addition, the average maturity extended again from 169 to 265 days, with around 30% of allocations concentrated in securities maturing between 2027 and 2028, helping further lengthen the local currency maturity profile. Demand for inflation hedging also increased, with CER-linked bonds representing 63% of the total amount awarded, while dollar-linked instruments accounted for only 2% of the total. Finally, between the first and second rounds, USD 250 M of Bonar 2027 (AO27) were placed at a 5.59% YTM, below the yield validated in its first auction (5.89% YTM), bringing the total amount issued to USD 500 M. In the next auction, the Treasury will face obligations of ARS 7.9 trillion in order to meet all maturities for the month.

ARS-denominated debt. Local currency debt had a positive but volatile week, shaped by the Treasury auction and amid an inflation print that came in worse than expected. At the same time, overnight rates continued to trade steadily around 20% NAR, even after the Treasury absorbed pesos from the system. In this context, CER-linked bonds were the best performers, rising 1.4%, and currently yield CER +3% in the 2026 segment and CER +7% across the rest of the curve, while pricing an implied inflation rate of 2.2% m/m for the next two months and 27.3% cumulative in 2026. Dual bonds followed with a 1.3% gain and yield a spread of 1.5% over the Tamar rate, with prices implying a Tamar breakeven in the 27%–28% NAR range depending on the instrument. The fixed-rate curve advanced 0.8% and compressed relative to last week, particularly after Thursday’s auction: it now yields 28.1% NAR (2.37% EMR) in the short end and 29.6% NAR in the long end (2.46% EMR). Meanwhile, dollar-linked bonds fell 0.8% and yield devaluation +1%, while pricing a direct depreciation of 3.5% by April and 9.3% by June.

Country risk near 600 bps. Argentine sovereign bonds in dollars traded with a negative tone again during the week, amid an international environment that remains unfavorable for emerging market debt. On average, Argentine bonds declined 0.8%, broadly in line with the 0.9% drop observed in comparable countries. The correction was mainly concentrated in the long end of the curve: ARGENT Bonds fell 1.0%, while Argentina Bonar Bonds posted a more moderate 0.5% decline, combining gains in the short end with losses in the long end. Within the ARGENTs, the GD41 was the most affected, falling 2.1% during the week. As a result, the Argentina Country Risk Index closed at 584 bps. In terms of yields, Bonars offer rates of 8.4% in the short end and 10.6% in the long end, further steepening the positive slope of the curve, while ARGENTs yield 7.1% and 10.0%, respectively. The relatively larger correction in bonds under foreign law narrowed the legislative spread between the GD30 and the AL30 to 2.7%, down from 3.7% the previous week. BOPREAL Bonds also showed a negative performance, albeit with lower volatility, declining 0.2% on average during the week, mainly due to the drop in Serie 3 (-2.0%), partially offset by gains in Serie 1, particularly tranche C (+1.2%); the curve now yields between 0.2% and 8.2%, still below sovereign bonds. In the sub-sovereign segment, provincial bonds followed the trend with a marginal 0.1% decline, led by the Buenos Aires 2037 Bond (-0.7%), with yields ranging between 6.2% and 12.1%. Finally, corporate debt showed greater stability and managed to close with a slight 0.1% average increase, with Pampa Energía 2031 standing out within the energy sector (+0.8%), while issues such as Arcor 2026 and Telecom Argentina 2031 recorded declines of 0.3% and 0.2%, respectively. In yield terms, corporate bonds continue to offer returns of 6.0%–9.5% under foreign law and 4.5%–8.0% in the local market.

The Merval trades sideways. The S&P Merval rose 1.2% in USD, closing the week at USD 1,795. Year-to-date, it is down 10.4% in dollar terms. The energy sector was the main driver of gains in the index—supported by higher oil prices—while banks and materials partially offset the advance. The best-performing stocks during the week were Banco de Valores (+21.5%), clearly outperforming the rest of the financial sector, Transportadora de Gas del Norte (+14.8%), and Cresud (+9.0%). Meanwhile, the largest declines were recorded by Aluar (-7.0%), Ternium (-4.9%), and Banco Macro (-4.4%). Argentine equities listed on New York Stock Exchange and NASDAQ posted an average increase of 0.2%, a more moderate performance than in the local market. The top gainers were Vista Energy (+4.4%), Adecoagro (+1.8%), and Transportadora de Gas del Sur (+1.0%), while the largest declines were seen in Bioceres Crop Solutions (-14.0%), Grupo Supervielle (-6.8%), and BBVA Argentina (-6.6%).

WEEK AHEAD:

• The week will begin with the release of the February fiscal result, which is expected to post a surplus as usual, although it should be noted that a large share of January’s surplus was supported by extraordinary revenues and that February’s tax collection has already shown some deterioration.
• On Tuesday, the February Construction Cost Index will be released, a key indicator for assessing price dynamics in a context where inflation remains firm.
• Finally, on Thursday, the February Argentina Trade Balance will be published, which will help determine whether the recovery seen in January is sustained, as it was largely driven by a decline in imports reflecting still-weak economic activity.

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