Argentine market in fashion

Thanks to global context, Argentina is living on extra income, which, in addition to dollar level guaranteed by Argentine Central Bank, offers handsome profits (Brazil gives 6 per cent, Argentina 8 per cent, for example) to those deciding to participate in markets. Yesterday, country-risk slid (almost 4 per cent) and reserves increased ($31 billions). It is not known if it was due to bonds or assets, but the truth is that all bond records were broken, and the investor who sold at a good price cannot repurchase tomorrow. There's a festival calling money, more than in any other part of the world (though the latter also lives with euphoria; we should remember that Bernie Ecclestone has just sell its apartment in London for 125 millions of euros). Despite continuous hikes, the country still looks cheap (whether in farm, real estate or any other asset) with respect to other nations. Nobody trembles, since there's no fiscal surplus. A financial entity (for example, Macro) received yesterday a storm of offers for a 30-day bond. This is unusual, even more when 5-to-1 offers for those papers were expected last Friday, and yesterday they already exceeded 10-to-1 barrier. This also shows that, in any moment, proposals for domestic bank purchase may get stronger, which are worth a few coins with respect to foreign ones.

Yesterday, domestic markets showed strong rises, with Argentine bonds as the most sought among emerging countries. Lower bond transaction amount did not prevent prices from breaking records: between the Electronic Over-the-Counter Market (MAE, in its Spanish acronym) and Buenos Aires Stock Exchange, ARG$926 millions were traded.

The star of market was Par in dollars, though the wave of foreign purchases reached all variables, included Discount in Argentine pesos and GDP coupon. Country-risk settled at new minimums: it ended at 253 points with a 3.7-per cent decline. After 5 years of default, seeing Argentina at those levels (its debt only pays 2.5 percentage points more than the safest papers of the world, US's) is something unimaginable, even to the most optimistic individual.

Bonanza extended to post-default bonds in Argentine pesos, which bear medium term. In this segment, PRE9 keeps on being the one achieving the greatest daily rises. Yesterday, it climbed 0.76 per cent, while the remaining post-default papers leaped 0.35 per cent on average. On the other hand, BODEN 2013 increased 0.34 per cent and 2012 crumbled 0.25 per cent.

Slight hike

In foreign exchange market, transactions were Monday's usual ones, around $300 millions. Dollar opened stable, though it fell after midday, to afterwards end with a slight rise with respect to last Thursday. In Forex (main wholesale market), the American currency closed at ARG$3.062 and in exchange agencies, it remained at ARG$3.08 for sale. Argentine Central Bank bought almost $40 millions and raised reserves to $30.94 billions. They may reach to $31 billions today, though it may not be announced by Argentine President Néstor Kirchner (as he usually does every $1-billion growth), since on Friday those reserves may slide due to the $392-million payment of GDP coupon.

Dollar remained highly seller for today. Foreign currency offer hits $60 millions and there are buyers for $2 millions. Requested prices in wholesale market are below ARG$3.06. We should not forget that the goal is to cause reserves to settle above $31 billions by the end of the year. A detail to take into account is that today Argentine Central Bank will tender ARG$2.1 billions in LEBAC and NOBAC (Central Bank's Bills of Exchange and Securities). Results will be closely followed, since the aim will be to see up to what extent market accepts current level of interest rates. For example, BADLAR (average rate paid by private banks for more-than-ARG$1-million 30-day time deposits) settles at 9.75 per cent.

US rate

The Federal Reserve will also hold a meeting today to define the future of US interest rates. Although it will surely keep them at 5.25 per cent annual, investors want to hear such meeting's press release to see whether there are sings these rates will be cut in January or March, when Fed's members gather again. Tomorrow, US November retail sales will be disclosed; on Thursday, job requests until December 9 and on Friday, consumer price index. All these data are crucial to see whether US economy is slowing down or not. Market future depends mostly on this information.