The first financial week of the year showed sensitive climate change. What in December looked like a way to a new standard, with the country's risk in 829 points, now it seems to be reversed. Yesterday the country's risk fell to 729 points, reflecting the renewed interest of investors for Argentine bonds, documents that are important these days 30% cheaper than a year ago.
The rise in prices was also generalized in external debt bonds, which increased by more than 4% during the week, and in stocks. MerVal was registered for the first week of the year, an increase of 6.2%.
Explanations of what happened between Wednesday and yesterday are coming more than the external phenomena of the local. The main thing: the financial world seems convinced that the US Federal Reserve may not raise interest rates again monetary policy. This is a crucial fact: just a few months ago, the market debated whether the Fed would be forced to raise rates three or four times during 2019. Now, the betting goes from zero to one time.
These results crucial for emerging markets. During 2018, the fear of monetary tightening by the Fed led to a strong outflow of funds from emerging markets.
This has weakened the financial resources of these countries, she caught Argentina badly stopped and the local economy suffered a double nelson, or four: capital outflow, collapse in bond prices and stocks, devaluation of the pesos and the country's causing risks. This indicator started in 2018 in the area of 350 points and ended, as stated, at 829 points. This in strictly financial. It also caused inflation to levels that were above what was expected at the beginning of the year.
In the United States, the rate of 10-year bonds, which is the standard of the financial world. fell by two months from 3.25% to 2.55%. It was in some way a signal for the funds to be repositioned in new market assets. Yesterday they returned to 2.66% due to good labor indicators.
The consultant José Siaba Serrate expands the explanations with some technical considerations: "Rising country risk at the end of last year was somewhat exaggerated and amplified by the insolvency of the secondary market of Argentine bonds." This was a decisive factor in the final days of the year, when banks that renewed the repo loan with the government for 1,350 million went out to buy cover, as a guarantee was received from Bonar 2024 bonds. This insurance claim from the default is what it did to it increase the price of such coverage, which is a substitute for measuring the country's risk.
For Siaba Serrate, what the Federal Reserve does (or rather, what it does) is the key. "We have already seen much softer speech by Jerome Powell (head of the Fed), where he begins to show greater flexibility and recognizes that the interest rate is well close to the point of indifference, that is, the point at which the level of the rate does not help or cool down or warm up the economy of that country. "And in the opinion of this consultant, the trade war between China and the United States, the other risk factor for the new ones, tends to cool. "It seems that Trump has already understood that there is no margin for increasing tariffs without being exploited by Wall Street."
As you can see, it meant more than what happened outside of a local factor. On the domestic market they celebrate that the Central Bank fulfills the monetary goals and carefully sees that the exchange rate "repeats" on the floor of the stock exchange.
Election surveys, for now, do not move the ammeter. What does not cease to be good news for the government.