When It Rains, It Pours

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When It Rains, It Pours

Second week
March 2020

World financial markets are still walking on a tightrope. At the beginning of the week, oil price dropped almost 20% after Saudi Arabia and Russia started preparing for a price war. The magnitude and speed of the fall put the energy industry at risk, but the impact on the entire international financial system could be significant. In “panic” mode, 10-year American Treasury bonds yield 0.50%, and stock exchanges temporarily suspended their sessions after a 7% drop. This is bad news for Argentina, both from a micro perspective due to the short-term viability of Vaca Muerta, and from a macro perspective given its impact on activity, the foreign front, and the odds of coming to an agreement with bondholders.