Yields On Argentina’s Infamous Century Bond Hit All-Time High Amid Currency Bloodbath

Yeah, so if you read my end-of-day market wrap on Thursday, there was some fun color (figuratively and literally) on Argentina.

Here’s that color:

The Argentine peso was crushed. And I mean fucking crushed, falling more than 6% with traders citing a BCRA that was M.I.A. As a reminder, the central bank held the line at 25 ahead of the IMF deal, but now that the deal is struck, their interventions are more sporadic. Expect them to be back over the next couple of sessions. Bid-asks were wide and some of the turmoil was attributed to this “URRRRRRRGENTE” tweet from Marcelo Bonelli, who Bloomberg describes as “a well-known Argentine reporter”:

I’m not about to try and chase that shit down, but suffice to say the situation with the peso is similarly “URRRRRRRGENTE!”:

That “URRRRRRRGENTE” tweet from Marcelo Bonelli was borne out. Federico Sturzenegger resigned and was replaced by now former finance minister Luis Caputo.

Analyst opinions on what that will ultimately mean for the beleaguered peso vary, but suffice to say the opening rally on Friday quickly evaporated.

Amid the early knee-jerk lower in USDARS (i.e., peso appreciation), Mohamed El-Erian was stoked:

As trading resumes, a notable appreciation of the #currency in #Argentina — and a source of relief for the economy , the #IMF and #EM as a whole. #emergingmarkets #EM https://t.co/JlbQxdB43f

— Mohamed A. El-Erian (@elerianm) June 15, 2018

As you can see, that tweet hit at 12 minutes after 9:00 a.m. ET. Here’s what happened next:

Oops.

“[It is] rushed and sloppy to change the president of the central bank who signed an agreement with the IMF that hasn’t even started,” Perspectivas Economicas (a research firm led by Luis Secco, former cabinet chief at state-run Banco de la Nacion) wrote today, underscoring the notion that not everyone thinks this abrupt shuffle was a great idea.

And when it comes to Argentina, there’s nothing that gets more laughs than the country’s infamous “century bond” sold last year amid the EM euphoria.

On Friday, the yield on those bonds hit 9%, the highest on record: