Argentina markets soar after US Treasury pledges support

Core Insights - Argentine financial assets experienced a significant rally, with U.S.-traded stocks increasing over 10%, international dollar bonds rising more than 6 cents, and the peso strengthening after U.S. support was indicated [1][6]. Group 1: U.S. Support and Political Context - U.S. Treasury Secretary Scott Bessent mentioned potential support measures for Argentina, including swap lines and direct currency purchases, labeling Argentina as a "systemically important U.S. ally in Latin America" [2]. - Argentine President Javier Milei is scheduled to meet with U.S. President Donald Trump, which may influence future economic policies [2]. - The Argentine government announced the removal of export taxes on all grains, a move aimed at stabilizing the economy ahead of the midterm elections on October 26 [3]. Group 2: Market Reactions and Investor Sentiment - Argentine markets had previously declined sharply, with international bonds down over 20% for the year and the peso nearing its weaker limit due to political concerns and election losses [4]. - The recent U.S. intervention is seen as a critical opportunity for the Milei administration to reorient its economic strategy before the upcoming elections, potentially alleviating investor anxiety [5]. - An index of Argentine stocks traded in U.S. exchanges surged nearly 12%, and the 2046 bond increased by 6.7 cents, indicating a positive market response [6]. Group 3: Economic Measures and Future Outlook - Despite the recent rally, yields on eurobonds remain high, ranging from 16% to 26%, reflecting ongoing investor skepticism regarding Milei's economic reforms [7]. - A combination of U.S. financial support and the newly announced export tax measures could enhance Milei's ability to manage the current foreign exchange framework leading up to the elections [8].