Argentina's bonds wobble as investors eye US Bessent's support pledge

Core Viewpoint - Argentina's international dollar bonds experienced a rally that quickly dissipated following U.S. Treasury Secretary Scott Bessent's statement indicating that the U.S. is "not putting money into Argentina," despite earlier comments suggesting potential financial support for President Javier Milei's government [1][2]. Group 1: Bond Market Reaction - Argentina's bonds initially rose by approximately two cents after Bessent's supportive comments but turned negative after his "no money" statement, remaining largely unchanged in afternoon trading [2]. - The 2030 maturity bonds were trading flat by 1400 GMT after an earlier increase of over 2 cents, with Argentina's bonds down 15% year-to-date as of Wednesday, following a significant rise of over 100% in 2024 [3]. Group 2: Currency and Economic Context - The Argentine peso has depreciated nearly 30% against the dollar year-to-date, despite government interventions to defend the currency and maintain some foreign exchange controls [3]. - The local peso, which had strengthened nearly 11% against the U.S. dollar last week, has declined by 6.7% this week, indicating volatility in the currency market [5]. Group 3: IMF and Economic Reforms - The IMF emphasized the need for Argentina to establish a fiscal anchor and a consistent monetary policy, alongside building broad political support to implement the ambitious reform agenda proposed by Milei's government [4]. - Argentina's financial markets, which had previously rallied following initial U.S. support, have faced declines amid uncertainty regarding U.S. backing and the potential impact of upcoming mid-term legislative elections on Milei's reform agenda [4].