Argentina still underperforming; selling hits broader EM market as focus shifts to Fed

By Rebecca Melvin

New York, June 12 – Argentina’s bonds were underperforming again on Tuesday as selling hit emerging markets bonds in general.

Argentina credit default swaps widened by some 20 basis points to 375 bps even as the peso tightened. Investors watched headlines about worker strikes starting in that country, and the Argentine central bank decided to stand pat on rates at 40% after a policy-setting meeting, market sources said.

The central bank already lifted rates by 600 bps to 40% in early May with the aim of staving off a plummet in the peso.

Meanwhile other emerging markets credits sold off. Brazil and the Central and Emerging Europe, Middle East and Africa regions were also weaker earlier during a risk-off day ahead of wrap up of the U.S. Federal Open Market Committee’s two-day policy meeting on Wednesday and amid anxiety about whether it would hike rates again or not.

“If there were only two rate hikes this year instead of four that would reduce the pressure [on emerging markets], Michael Roche, an emerging markets fixed-income strategist with Seaport Global Securities, said.

The Fed has raised rates once so far this year.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.