The government is trying to show that the worst is over. The decline in activity levels and the acceleration of inflation that characterized the first quarter weighed on approval ratings, which fell to their lowest level in six months — though they remain elevated. The most pressing issue now is for April's inflation to reverse course, giving real wages and consumption some breathing room, while the harvest and energy sector continue to support a return to GDP growth. Meanwhile, the BCRA and the Treasury continue to do their homework: the BCRA is accelerating its pace of FX purchases, and the Treasury continues to issue domestic foreign-currency debt to cover July maturities while withdrawing pesos from the market through local-currency debt placements. Against this backdrop, April closed with a stable exchange rate, falling interest rates, and rising sovereign bonds — although country risk remains above 550 bps, and the Merval was the weakest performer, falling again and trading sideways since October last year. May is underway, and the focus of the first week will be on April tax collection data, the first private inflation estimates, and manufacturing and construction activity indicators for March. The April REM publication will also be closely watched.

GOVERNMENT CONFIDENCE POSTED A SHARP RETREAT. In April, the Government Confidence Index compiled by Universidad Di Tella — a useful proxy for approval ratings — fell 12% m/m, the sharpest drop since last August, reaching 40.4% and accumulating a 9 pp decline from the November peak when the elections were won. Unlike prior months, the drop in approval was broad-based across regions, with a more pronounced retreat in the interior of the country than in Greater Buenos Aires.

CORPORATE AND SUB-SOVEREIGN DEBT ISSUANCE PICKED UP. Dollar-denominated placements in April totaled USD 2.060 B — corporates (USD 1.410 B) and sub-sovereigns (USD 650 M) — recovering ground from USD 343 M in March and USD 1.181 B in February. The bulk of the flow was channeled under foreign law (USD 1.713 B), with Vista Energy (USD 500 M, 7.875%), Edenor (USD 550 M, 9.5%), and Chubut (USD 650 M, 9.45%) as the standout issuers. In the local market, USD 347 M was placed. These issuances add FX supply to the exchange market, complementing agricultural flows and financial loans. Year-to-date through April, total issuances amount to USD 6.766 B — USD 5.017 B in corporates and USD 1.750 B in sub-sovereigns.

THE BCRA ACCELERATED ITS FX PURCHASES. In the last week of April, the BCRA purchased USD 390 M in the official FX market, closing the month with net purchases of USD 2.770 B — an average of USD 138 M per day, nearly double the pace of February and March — with the agricultural sector contributing approximately USD 2.600 B and the remainder covered mainly by financial loans. For reference, in April 2025 agricultural FX settlement reached USD 2.800 B, but other transactions posted a negative balance of nearly USD 3.700 B due to higher demand for external assets, lower financial loan inflows, and higher payments for goods and services imports.

RESERVES IMPROVED. The BCRA's sustained FX purchases in the exchange market remain the main support for international reserves, even as the Treasury and the central bank itself continue to service debt. In the last week of April, gross reserves fell USD 1.669 B, as the USD 390 M in purchases was more than offset by a reduction in foreign-currency reserve requirements of approximately USD 1.500 B, Bopreal maturity payments of USD 318 M, and other operations implying a USD 200 M decline. For the full month, international reserves rose USD 2.430 B, as the USD 2.770 B in FX market interventions offset all other operations. The gross stock closed April at USD 44.483 B, while net reserves under the IMF definition stood at a negative balance of USD 14.400 B, USD 1.600 B more negative than at end-March.

THE OFFICIAL EXCHANGE RATE FELL 1.2% DURING THE WEEK, closing the month at $1,381.10, just below the March close of $1,383, and 23% below the ceiling of the band ($1,703.22). Financial dollar rates edged higher during the week — the MEP rose 0.3% to close at $1,441, while the financial dollar climbed 0.2% to $1,495 — closing April up 0.7% and 1.0% respectively. Dollar futures contracts showed contained moves during the week (–0.2% on average), with implied depreciation of 2.4% m/m in May and ~2.1% m/m from June onward. Implicit rates rose sharply across the curve — from a 20%–23% NAR range the prior week to 27%–30% NAR — in line with April futures settlement and the unwinding of carry trade positions. Open interest closed at 5,224 M contracts and volume at 1,628 M.

LECAPS HAD A GOOD MONTH. During the week, Dual bonds and Lecaps rose 0.2%, with rates virtually unchanged, while CER-linked bonds (–1.1%) and exchange rate-linked instruments declined 1.1% and 0.8% respectively. The Repo rate rose to 21.4% NAR and the overnight repo to 23.9% NAR, up from around 20% the prior week. For the month, Lecaps accumulated a gain of 2.2% — with rate compression from 2.3% EMR at the start of the month to 2.0% EMR at close — Dual bonds returned 1.3% — with spreads over TAMAR of 2.1%–2.4% — and CER bonds advanced 1.2% — the short end compressed from positive real rates to CER –7%/–1.8% in the 2026 segment, while the 2027–2028 segment steepened to CER +1.2%/+8.0%. The market is pricing in inflation of 2.3% m/m in April — below our projections — 1.9% m/m from May through October, and a full-year 2026 cumulative of 28.2%. Dollar-linked bonds declined 1.5% for the month — the short end yields depreciation of –0.8% and the long end +2.2%, with an implied exchange rate of $1,454 toward June, +2.5% m/m.

THE TREASURY IMPROVED ITS MATURITY PROFILE. In the April 28th auction, the Treasury faced maturities of $7.9 trillion and rolled over 102%, with net financing of $0.18 trillion and an average term of 537 days. The bulk of the amount was concentrated in the Jun-26 Lecap (S12J6) with $4.94 trillion awarded at a cutoff rate of 2.1% EMR. The remainder was distributed among CER/TAMAR (24%), TAMAR (13%), and dollar-linked (2%). In CER, the TZXS8 cut at 8.1% (secondary: 8.4%) and the new CER/TAMAR Dual at CER +7.31%, below the secondary market level. In TAMAR, the TMG28 cut at a spread of 3.0% (secondary: 2.2%). In dollars, the AO27 and AO28 each awarded the expanded maximum of USD 350 M — the AO27 at a minimum yield of 5.16% and the AO28 at 8.8% — filling the quota at rates slightly above market. April closed with a rollover ratio of 115% and net financing of $2.28 trillion, with the average term extending to 537 days from 414 days in March and the auction NAR compressing to 24.8% from 28.5%, helping to clear the maturity profile ahead of an election year. This dynamic is part of the Treasury's sustained strategy of placing above its maturities, absorbing the peso surplus generated by the BCRA's FX purchases. In terms of dollar bonds, cumulative placements of AO27 (USD 1.445 B), AO28 (USD 834 M), and AN29 (USD 1.000 B) total USD 3.279 B, contributing to cover part of the July foreign-currency maturities, which exceed USD 4.000 B.

GOOD APRIL FOR SOVEREIGN BONDS. Dollar-denominated sovereigns posted a quiet week but closed April with a gain of 3.1%, in line with comparable emerging market bonds, which fell 0.1% during the week and accumulated a 2.0% rise for the month. Country risk rose 10 bps to 567 bps, though it declined 57 bps over the full month. The largest weekly declines were concentrated in the Bonares curve, which fell 0.3% on average — led by the AL35 (–0.7%) — while Globals rose 0.1%, with the GD30 advancing 0.9%. In yield terms, Bonares trade at 7.8% YTM on the short end and 10.2% YTM on the long end, while Globals yield 6.6% YTM at the short end and 9.6% at the long end. The legislative spread on the 2030 tranche widened again, from 1.8% to 2.4%. Bopreales moved in the opposite direction, rising 0.9% for the week and accumulating 0.5% for the month, led by Series 3 (+2.7%), while Series 4-A declined 2.4%. Bopreales yield between 4.2% and 8.2%. Provincial bonds showed no change during the week and advanced 1.7% for the month; notable moves included Buenos Aires 2037 (–0.6% weekly) and Neuquén 2030 (+0.6%). Sub-sovereigns offer yields ranging from 6.6% to 12.4%. Corporate bonds rose 0.1% during the week and closed April up 1.2%. Under local law, standouts included Pan American Energy (+2.1%) and John Deere 2028 (+2.0%); under foreign law, IRSA 2035 (+0.6%) and Arcor 2033 (+0.6%). Local-law instruments yield an average of 4.8% YTM, compared to 7.4% YTM for foreign-law instruments.

EQUITIES DECLINED. The Merval fell 0.2% during the week in peso terms and 1.6% in dollar terms. For the month, it dropped 2.0% in dollars and closed at USD 1,887. While the weekly move ran counter to global markets, the Latin American equity index fell 1.0%. The banking, materials, and utilities sectors dragged the Merval lower, and gains in the energy sector — driven by higher oil prices — were not enough to offset the decline. The largest weekly decliners were TGN (–6.6%), Supervielle (–7.4%), and VALO (–5.7%), while the top gainers were YPF (+4.1%), Mirgor (+3.9%), and Telecom (+3.5%). Stocks listed on Wall Street fell 1.2% during the week and closed April down 0.8%. The largest weekly declines were posted by Bioceres (–20.2%), Supervielle (–8.0%), and Globant (–5.9%), while AdecoAgro (+7.5%), Vista (+5.4%), and Telecom (+4.8%) turned in the best performances.

WEEK AHEAD. Monday the 4th brings April tax revenues, against a backdrop of consecutive real declines in tax receipts. On Thursday the 7th, the manufacturing PMI and construction activity indicators for March are due — two sectors that have been contracting but may have improved at the margin — providing a signal on whether the activity floor has been consolidated. The same day sees the release of the BCRA's REM, where the market will update its inflation and exchange rate projections following the April close.