By Adam Jourdan and Walter Bianchi
BUENOS AIRES (Reuters) - Argentine markets held steady on Wednesday, waiting for policy signals from the newly inaugurated government of center-left leader Alberto Fernandez and his top economic team after conservative Mauricio Macri handed over power this week.
The peso , whose freefall has been kept in check by currency controls imposed in September, ended flat, while over-the-counter bonds rose slightly. The country's S&P Merval stock index (MERV) was also unmoved.
Argentina's new economy minister, 37-year-old Martin Guzman, is expected to start laying out his plans to stabilize the country's wobbly economy and revitalize growth after the latter stage of Macri's rule was plagued by recession.
"The uncertainty which we have lived with in recent months should begin to clear," local brokerage Portfolio Personal Investment (PPI) said in a note.
Axel Kicillof, a leftist economist who took over as the governor of Buenos Aires province, Argentina's largest, said in a speech the local government did not have enough funds to cover all its debt obligations while paying its bills.
Buenos Aires has been a major issuer of debt, including to overseas creditors, who see the province as a test case for how Argentina will be able to deal overall with talks to restructure around $100 billion of debt amid fears over a default.
"The province wants and has the will to fulfill its commitments, but it needs to have a sustainable debt structure. The financial situation of the province is delicate," Kicillof said in a speech in the city La Plata.
"We will start a dialogue with creditors to find a solution to the problem between the government, the people and them."
Peronist leader Fernandez was sworn in as president on Tuesday, marking a shift to the left for Argentina, Latin America's No. 3 economy, as the country fights rampant inflation, credit default fears and rising poverty.
Argentine bonds have risen this week, a signal of investor hopes that the new administration will take a positive approach to talks about restructuring its debt.
The new government will likely look to cut high interest rates, currently above 60%, which are set by daily central bank auctions of short-term "Leliq" notes, which had gone out of fashion with banks ahead of the new government's arrival.
A second daily Leliq auction on Wednesday failed, traders told Reuters, the first time since October last year.
(GRAPHIC: Going short - https://fingfx.thomsonreuters.com/gfx/editorcharts/ARGENTINA-ECONOMY-RISKS/0H001QX7X8HR/eikon.png)