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Saturday, January 29, 2022

Bonds do not stop falling in 2022 and Country Risk accumulated an increase of 11% in two weeks

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Bonds are reaching the lowest parities since the 2020 restructuring. If there is an agreement with the IMF you could have a rebound, but there is not a single variable that moves prices. What the market does not see is a plan with fine numbers in terms of deficit reduction, inflation, etc. Without that it is difficult for there to be an agreement with the IMF, and at the same time I see little potential for an agreement with the Fund without a plan,” he said in a dialogue with Ámbito Santiago Abdullah, director of Portfolio Personal Investments (PPI).

Meanwhile, the consultant Delphos Investment he warned that “foreign banks that still cover Argentina seem to begin to buy the scenario of a non-agreement with the agency, and with it the bad mood seems to grow.” “We still assign a 65/70% chance to an hourly deal, which otherwise wouldn’t do much more than decompress some of this financial stress and improve reputation a bit.“, narrowed.

The main difference between the Government and the institution led by Kristalina Georgieva lies in how to reduce the fiscal deficit. While from Casa Rosada they seek to reach the balance of public accounts in 2027, based on greater collection as the main driver of consolidation, in the Fund they intend to cut spending in real terms to reach zero deficit faster.

The spokeswoman for the presidency, Gabriela Cerruti, assured the press on Thursday that Argentina had already presented its proposal and that now it is up to the Fund to respond as quickly as possible.

“In the absence of access to external markets and amid low domestic savings, a slower fiscal consolidation path implies more monetary assistance and, therefore, higher inflation and larger financial imbalances in terms of the exchange rate gap” said Diego Pereira, chief economist for the Southern Cone and Peru at JP Morgan.

In this context, Foreign Minister Santiago Cafiero will seek the key endorsement of the United States government when he travels to Washington next week to meet with Secretary of the State Department, Antony Blinken. It should be remembered that the next due date to be amortized is at the end of March for almost US$4,000 million, so that date is speculated as the objective of an agreement to avoid default.

Stocks and ADRs

Meanwhile, the Buenos Aires stock market closed with a slight improvement this Friday, in a market conditioned by high inflation, which in 2021 was the second highest in 30 years, behind the 2019 data.

The S&P Merval index of Argentine Stock Exchanges and Markets (BYMA) rose 0.1% to 85,481 units, with a notable drop in liquidity. In the week it rebounded 1.3%

Meanwhile, local shares listed on Wall Street (ADRs) ended the day with most gains, among which those of Tenaris (4.8%), YPF (4.2%), Central Puerto (3.3%) and Cresud (3%) stood out.

Prices increased by 3.8% in the last month of 2021 and accumulated a rise of 50.9% in all of last year, as officially reported by INDEC.

The acceleration of prices is a phenomenon that has been experienced worldwide in the last year. The most emblematic case was that of the United States, which suffered the highest inflation in almost 40 years.

However, Argentina started from a much higher inflation level than its peers. In addition, the current dynamics is worrying considering that key prices for the economy, such as the dollar and public service rates, have been delayed in recent times, and should be adjusted at some point.

Nor did the program for freezing the prices of mass consumption products, which ran from October to January 7, have the desired effect in December. Agostina Myronec, an analyst at the consulting firm Ecolatina, explained to this outlet that the prices of the basket of goods covered by the measure rose from 1.5% to 2.9% last month.

Before the end of the product price freezes, the Government formally launched the new Care Prices program.

At the same time, within the framework of negotiations with the International Monetary Fund (IMF), Economy Minister Martín Guzmán assured that there is consensus between the Government and the organization on the need to combat inflation from various approaches. In this sense, the official stressed the importance of price agreements to coordinate expectations, which should be complemented with a lower weight of the monetary issue in financing the fiscal deficit and an inflow of foreign currency that allows the exchange rate to be controlled.

The inflation of 2021 was higher than the advance of the different dollar prices and also beat the fixed terms. In this context, CER bonds (adjusted for inflation) were the most demanded instruments in the local market. The shares also won the price race, although the Merval remained far from its historical average.

Source From: Ambito


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