INDEC pushes bonds down

With its way of measuring inflation (only 0.4 per cent in May), Argentine Statistics and Census Institute (INDEC, in its Spanish acronym) has pushed indexed peso-denominated bonds down again, which have lost up to 2.2 per cent. Rigged CPI is a compulsory money withdrawal not only from investors, but also from pensioners. Once, Argentine State returned with BOCON PRO 12 deductions that former Argentine President Fernando De la Rúa had made on taxpayers earning more than ARG$700. By publishing a lower-than-real index, these papers' rate plummets. These individuals are also affected by official tricks.

INDEC has lashed Argentine bonds again, which plunged yesterday more than 2 per cent in one hour. Traders and investors received in a negative manner data showing cost of living has increased only 0.4 per cent in May. They did not think that government could go so far in hiding real inflation.

"If this unreal inflation level is revealed during an electoral week, I don't want to think what may happen till October presidential elections. This is also dirty campaigning, since it's a compulsory debt deduction," an investor who had decided to buy peso-denominated Discount again, believing the worst had already gone by in INDEC, stated.

Argentine bonds had done till 3 p.m. an acceptable trip, since they managed to dodge rise of US Treasury bonds' rate to 4.99 per cent annual, the highest level of the year. These papers did not give in either when the head of the Federal Reserve, Ben Bernanke, hinted that a longer-than-expected period would have to go by before cutting US interest rates.

However, such strength was not enough to endure discouragement from inflation news. Peso-denominated Discount dropped 1.63 per cent at one point, while Par in domestic currency (the other swap bond) lost 1.22 per cent. GDP coupon (the star of menu) left on its way 2.21 per cent, but it ended quite well, since it does not adjust by price development, rather by economy growth. This derivative can soon recover yesterday's losses.

Trading was high, though it stopped around the end. Between the Electronic Over-the-Counter Market (MAE, in its Spanish acronym) and Buenos Aires Stock Exchange, ARG$2.5 billions were traded.

Several foreign investors left market, particularly post-default bonds in pesos (medium-term papers). BOGAR 2018 was severely hit, dipping 1.10 per cent. The remaining post-default papers plummeted 0.40 per cent on average, being the least affected ones.

However, dollar-denominated bonds rose slightly. BODEN 2013 leaped 0.17 per cent and BODEN 2012, 0.06 per cent. The three series of BONAR, all in dollars, were ignored by investors. Argentine government did not deprive itself of campaigning with Argentine Central Bank's reserves, which climbed $208 millions in one day, summing $41 billions. Government sees reserve growth as an economic achievement. For that reason, the monetary authority made stronger purchases yesterday so as to take reserves beyond $41 billions.

Central Bank took advantage of strong dollar inflow from exporters. In Forex-MAE (market where banks trade), $442 millions were traded, to which we should add $259 millions from MEC (money changers' market).

Central Bank's robust purchases caused wholesale dollar to climb some hundredths. The American currency gathered strength after midday, closing at ARG$3.079.

Market shows a highly buying trend for today, since there were $70 millions in bid and only $7 millions in offer after close.

Market will continue in a bad mood on Wednesday. All the same, it may be a good opportunity to buy bonds and coupons, since, despite INDEC meddling, Argentine papers have one of the highest rates of the world.