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Dollar, fixed term, shares and the 5 keys of the week

With the arrival of Sergio Massa to the National Cabinet as Minister of Economy, Production and Agriculture, these are the 5 variables that must be monitored

By Christian A. Buteler

01/08/2022 – 06,58hs

From “The keys of the week” we will try to approach the data to take into account in the week that begins, in a few lines and in a concrete way the main variables that affect the investor. What the market observes and expects for the next 5 days.

1 dollar

  • BLUE $296 -12.43% weekly
  • MEP $281.43 -10.06% weekly
  • CCL $304.84 -9.02% weekly

First week of decline in financial dollars since the end of May. The cause, beyond Massa’s arrival at the economy ministry, is a sharp rise in interest rates. If the issuance of pesos is controlled, this rate level should stabilize the exchange rate at lower values. It will be key on Wednesday when the new minister announces the measures.

2 – Fees

How we were holding the BCRA had to raise rates again given last month’s acceleration in inflation. Fixed term rate 61% TNA (81.3% TEA) for deposits less than $10 million. Even with this level of rates and due to an expected inflation of over 7%, UVA fixed terms will continue to be convenient.

The treasure also raised the rate last week in its tender paying rates of 70% TNA (97% TEA) achieving a roll over of the debt of 194%

3 – Actions

  • Merval 122,528.27 +7.62% weekly
  • Merval in u$s 425.03 21.88% weekly

A very good week for Argentine equitieshad been working as a hedge against the rise in the dollar, but when it turned around, the latter managed to maintain its value, which also gave a strong increase measured in dollars.

For this week after the previous strong jump we should not discount any profit taking both in the index in pesos and in dollars.

Companies will have to continue disarming positions in CEDEAR by the new BCRA restrictions.

4 – Bonds

  • Country risk closes at 2,395 basis points -547bp weekly

Strong rebound from dollar bonds that we had been marking that they were on the floor with increases of up to 28%. Even with this jump they are still 30% down from the beginning of the year. In the same way that the measures announced by the new minister on Wednesday will be key for the exchange rate, they will also have an impact on the price of bonds. Until now we can only speak of a strong rebound but it is premature to speak of a change in trend.

The recovery of bonds in pesos continues showing a more stable behavior. They continue to be in high demand dollar-adjusted bonds. With rising inflation, cer bonds will gain momentum again, paying more attention to long-term bonds that have inflation yields +10 points.

5 – Deposits

In the midst of the crisis it is important to follow the evolution of deposits

We see that the deposits in pesos as of 7/27 they are at $5.03 trillion with a growth of 6.29% in the last 30 days, which implies that they were not affected by the exchange run.

In the case of dollar deposits they reach US$14,693 million, a decrease of US$793 million (5.12%) since the end of May. Here there was a direct impact of the crisis experienced in the last two months that should stabilize if they manage to calm the exchange rate.

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