The accounts add up, but confidence is missing.

Another negative week for dollar assets.

International risk-off continued to weigh on emerging markets, but the punishment on Argentine debt was once again deeper: long-dated Globals led the declines, country risk returned to the year's highs, and the Merval extended its losing streak. In pesos the mood was different. The official exchange rate held steady, rates settled without surprises after the month-end, the curve rose with CER bonds in the lead and the Treasury rolled over all of its maturities. Behind that calm is the BCRA, which sharply accelerated its pace of purchases on the back of agribusiness and provincial debt placements. Macro data were supportive: the current account returned to surplus in the second quarter and tax collection improved in September. The weakness remains in activity and credit, which is not picking up despite stable rates and a stable dollar, and is already reflected in confidence in the government, which returned to the lowest levels of the administration a little more than a year from the elections. This week the focus will be on the result of the first round in Brazil, country risk and the first August activity data, with the Buenos Aires City CPI as a preview of the national inflation figure.

Tax collection improved.

In September tax revenue rose 38% y/y in nominal terms and 3.8% y/y in real terms, although driven more by transitory than permanent factors. Income tax grew 22% y/y in real terms due to the change in the advance payment schedule, which shifted from August to September, and export duties rose almost 50% y/y in real terms on a low comparison base, since export duties on grains had been suspended in September last year. Fuel taxes contributed 15.8% y/y in real terms on the recomposition of the per-liter tax and domestic VAT (DGI) advanced 1.8% y/y in real terms, while social security fell 2.4% y/y in real terms. Year-to-date, tax revenue is down 2.8% y/y in real terms, with declines in every category except income tax and fuel.

Current account surplus.

In 2Q26 the current account posted a surplus of USD 2,214M, versus a deficit of USD 2,452M a year earlier. The change was explained by the goods trade balance, which went from USD 2,700M to USD 9,300M, with exports up 31% y/y and imports down 1.0% y/y. In the opposite direction, the investment income deficit widened by USD 2,500M to USD 6,000M on higher accrued profits, while services narrowed its deficit to USD 2,100M. The financial account added USD 1,500M, with public-sector debt issuance offsetting net private-sector outflows, and reserves rose USD 3,700M over the quarter.

Credit isn't picking up.

Despite stable rates and a stable exchange rate, in September private-sector deposits and loans continued to decline in real terms. Peso deposits fell 0.2% m/m and 2.0% y/y, with transactional deposits 2.6% lower and time deposits 3.1% higher, while loans fell 0.6% m/m and 0.7% y/y. Stagnant credit leaves system liquidity unchanged and is key to understanding the stability that rates are showing.

Confidence falls.

The UTDT Government Confidence Index (ICG) fell 5.9% in September, from 41.2% to 38.8%, matching the administration's lows of September 2025 and July 2026. Since December it is down 21%, after five consecutive declines between January and May. In month 33 of the term, Milei remains above Macri (35.0%), Alberto Fernández (24.6%) and both Cristina Kirchner terms (35.4% and 34.2%), and trails only Néstor Kirchner (52.4%). Since the ICG tends to be a good predictor of the ruling party's electoral support, the key will be whether confidence stabilizes or keeps eroding ahead of 2027.

The BCRA steps up its purchases.

With agribusiness as the main seller and a contribution from provincial debt placements, the BCRA bought USD 369M during the week, about USD 74M per session, versus the USD 12M per day it averaged in September through the 25th. The month thus closed with purchases of USD 473M, well above the USD 270M we had projected last week, and October started with USD 128M in two sessions. Gross reserves rose a bit more than USD 400M to close at USD 48,653M, after the seasonal end-of-month drop from reserve requirements and its recovery on the first business day of October.

The dollar stays put.

The purchases did not put pressure on the official exchange rate, which ended the week virtually unchanged at $1,523, up 0.5% in September and 4.4% year-to-date, against a 23% rise in consumer prices. As a result, the multilateral real exchange rate is down 10% on the year. The official rate trades 26% below the band ceiling, which will reach $1,951.5 at the end of October. The MEP fell 0.2% to $1,549 and the CCL rose 0.5% to $1,627, with the MEP-CCL spread widening to 5.0%.

Rates slightly higher, with CER bonds in the lead.

With the month-end behind us, the 1-day caución rate ended at 21.4% NAR and TAMAR at 24.4%, 0.8 pp above the prior week. With stable rates and a quiet dollar, the peso curve rose across almost all of its segments. CER/TAMAR duals led with a 0.9% gain, followed by CER bonds (0.6%), dollar-linked/TAMAR duals (0.4%) and fixed-rate/TAMAR duals (0.3%), fixed-rate bonds (0.1%) and TAMAR bonds (0.0%). Dollar-linked bonds were the only ones in negative territory, down 0.8%, dragged by the long end (-1.1%). At these prices Lecaps and Boncaps yield between 1.7% and 2.3% EMR. The CER curve trades between CER+2.4% and CER+3.7% in the 2026 segment, between CER+2.4% and CER+8.1% in 2027 and between CER+8.1% and CER+10.8% from 2028. Dollar-linked bonds yield 6.7% over devaluation on average, TAMAR bonds a spread of 5.2% and CER/TAMAR duals 9.4%.

The Treasury rolls over everything, but short.

In Monday's auction the Treasury awarded $8.62 trillion against maturities of $8.61 trillion, a 100.1% rollover. To secure the rollover it accepted a premium over the secondary market, especially in the CER TZXY7 (131 bps, at CER+6.0%) and the TAMAR TML27 (41 bps, at TAMAR+3.6%). That premium stayed in the short end: for the fourth consecutive auction it did not offer peso securities from 2028 onward, so as not to validate rates close to CER+11% and TAMAR+9%, and everything awarded matures before December 2027, with an average term of 5.8 months. With country risk on the rise, it also did not offer the 2029 Bonar in dollars again. The pressure comes at month-end: with the D30S6 exchange and what was awarded on Monday, the D30O6 totals USD 5,348M and is the largest dollar-linked maturity of the year.

Pressure on hard-dollar debt continues.

Dollar debt fell again, although this time the punishment was concentrated in Globals (-1.0% on average), while Bonars were practically unchanged (-0.1%). The declines came in the long end, led by GD46 (-2.3%), GD35 (-1.9%), GD41 (-1.6%) and AL35 (-1.0%), while the short end rose, with AL29 (0.7%), AL30 (0.6%), GD30 (0.4%) and AO27 (0.3%). International risk-off continued to weigh, and the behavior of the curve shows that the market prefers short maturities and punishes duration ahead of the electoral calendar. Country risk closed at 655 bps, 46 bps above the prior Friday and at the year's highs. At these prices Bonars yield between 4.1% and 13.1% and Globals between 7.0% and 11.2%. BOPREAL rose 0.4%.

The Merval extends its decline.

The Merval fell 4.3% in dollars to close at USD 1,707, bringing its year-to-date loss to 15.6%. Declines were widespread, with real estate, consumer staples, communications and financials hit hardest, while materials, non-essential consumer and construction held up best. In the leading panel, the largest drops were Cresud (-11.0%), Telecom (-9.6%), IRSA (-9.1%), Transportadora Gas del Norte (-7.8%), Holcim (-7.8%) and Galicia (-7.2%). Only Ternium (2.7%) and Mirgor (0.3%) ended in positive territory.

What's ahead.

The macro agenda brings the first August activity data. On Tuesday the BCRA publishes the September REM and on Wednesday INDEC releases the manufacturing Industrial Production Index (IPI) and the Construction Activity Synthetic Indicator (ISAC), which will show whether industry and construction, which have been dragging on activity, begin to recover after July's decline. On Thursday comes the Buenos Aires City CPI for September, the first preview of the national figure released the following week, following August's slowdown. On Friday the Treasury publishes the call for the October 14 auction, which faces maturities of $4.9 trillion concentrated in the Lecap S16O6, with the large end-of-month dollar-linked maturity on the horizon. The financial focus will be on dollar debt: the result of Brazil's first round this Sunday will set the regional tone on Monday and the market will closely watch whether country risk can move away from the year's highs.