Argentina markets surge as Milei’s party wins midterms, securing U.S. support deal

Argentina markets gave a pretty strong reaction on Monday after President Javier Milei and his La Libertad Avanza party secured a major midterm victory on Sunday, according to Reuters.

The election was a key condition tied to the $40 billion U.S. support arrangement, which includes a $20 billion central bank swap line and a potential $20 billion loan facility, both of which depended on his economic reforms continuing without political obstruction.

International bonds rose between 10 and 15 cents, local shares jumped more than 20%, and the peso gained over 10% against the dollar, making the session one of the strongest for the currency in modern trading history.

Official data showed La Libertad Avanza winning 41.5% in Buenos Aires province, edging out the Peronist coalition at 40.8%, an area that has been considered Peronist territory for decades.

National support for Milei crossed 40%, suggesting that voters backed the ongoing free-market reforms and sharp austerity cuts launched almost two years ago when he took office.

Inflation has been slowing under the reforms, though the measures have been painful and widely debated. But the scale of Sunday’s result suggests that voters wanted to keep Milei’s agenda intact, especially with U.S. funding linked to progress.

The reaction across markets was immediate. Argentina’s 2038 international dollar bond lifted to about 74 cents on the dollar after heavy pressure in the past weeks. Stocks of Argentine firms listed in the United States rose sharply, with some banking names rising up to 50%, while the Global X MSCI Argentina ETF moved 22% higher, reversing the 10.2% decline recorded earlier this year. The BKAR index of U.S.-traded Argentine stocks rose 40%.

La Libertad Avanza secures leverage in legislature

The new legislative numbers give Javier Milei more room to negotiate. Thierry Larose, portfolio manager at Vontobel Asset Management, said, “His victory was so, so much larger than expected.

Previously, he was in a state of survival, and now he’s in a very strong position to try to form tactical alliances and push some reforms that were completely out of reach.”

Christine Reed, emerging market fixed income portfolio manager at Ninety One, noted that Milei’s victory speech took a cooperative tone, signaling openness to working with lawmakers outside his party.

That tone mattered because Milei will still need votes from beyond his bloc to pass the most structural changes to Argentina’s economy.

Recent volatility set the backdrop. Last month, the party suffered a wider-than-expected loss in a provincial race in Buenos Aires, adding uncertainty. At the same time, the peso had weakened around 25% since foreign exchange controls were loosened in April, and nearly 30% since the start of the year.

The currency only briefly strengthened after U.S. Treasury Secretary Scott Bessent confirmed support in late September, before sliding again last week to a closing low of 1,491.50 per dollar.

Peso strength fuels discussion of foreign exchange reform

With the electoral risk now reduced, some investors believe Milei has space to move faster on one of the widest economic restructuring plans attempted in the country in recent history.

Graham Stock, senior sovereign strategist at RBC BlueBay Global Asset Management, said the election outcome extends the horizon for foreign investors looking at financial assets and real-economy investments ahead of the 2027 general elections.

Others see currency momentum possibly reinforcing itself.

Carmen Altenkirch, emerging markets sovereign analyst at Aviva Investors, said the result could start a “virtuous cycle” where locals begin selling dollars again instead of hoarding them. But Argentina’s dollar reserves remain thin.

Graham said the government must move quickly now that the peso is strengthening, adding, “They need to take advantage of peso strength to buy up dollars and build those reserves up, which they can do with the current regime.”

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