By Rodrigo Campos
NEW YORK (Reuters) -Argentine financial assets rallied on Monday, with U.S.-traded stocks up over 10%, international dollar bonds up more than 6 cents and the peso rallying after Washington said "all options are on the table" for the U.S. to support Argentina's government.
U.S. Treasury Secretary Scott Bessent said swap lines, direct currency purchases, and purchases of U.S. dollar-denominated government debt could be used in support of Argentina, which he labelled a "systemically
important U.S. ally in Latin America." Bessent added that Argentine President Javier Milei and U.S. President Donald Trump would meet on Tuesday.
Earlier, the Argentine government announced it would remove export taxes on all grains through next month, which would take the move past a key midterm election on October 26.
Argentine markets have fallen sharply over the past weeks, with international bonds down more than 20% for the year and the peso pressing against the weaker limit of a band set months ago, as corruption allegations inside President Javier Milei's circle and a larger-than-expected loss in a local election in Buenos Aires triggered concern over Milei's ability to reshape the economy.
"Argentina’s assets were in desperate need of a circuit breaker — and they just got one," said Alejo Czerwonko, CIO for emerging markets in the Americas at UBS. "Bessent’s intervention carries outsized weight at this fragile juncture. It provides the Milei administration with a critical window to reorient ahead of October’s midterms."
A favorable political outcome in the October election would go a long way toward containing the investor anxiety ignited by the Province of Buenos Aires vote earlier this month, Czerwonko added.
An index of Argentine stocks traded in U.S. exchanges jumped nearly 12% and the 2046 bond was up 6.7 cents at 53.85 cents on the dollar, data from MarketAxess showed. The peso strengthened 2% at 1,446 per dollar, after the Argentine central bank last week burned over $1 billion of reserves to defend it.
Despite the rally in eurobonds, yields were still relatively high between 16% and 26% across maturities. Investors were still focused on Milei's willingness to change course, which has been tested both in the streets and by markets.
“Depending on the scope and nature, a financial backstop from the U.S., combined with the export tax measures announced this morning, could help Milei more effectively manage within the current FX framework between now and the 26th," said Kathryn Exum, co-head of sovereign research at Gramercy Funds Management.
This could reduce the rate at which authorities burn through precious reserves, which at current levels is unsustainable, Exum added.
"The administration’s willingness and ability to adjust policy swiftly in the aftermath of the October vote will determine the path for bond prices and need for a liability management exercise or market access in 2026.”
(Reporting by Rodrigo Campos in New York, editing by Karin Strohecker and Sharon Singleton)
