In a striking vote that reshapes Argentina’s economic outlook, markets reacted decisively following the mid-term victory of Javier Milei’s La Libertad Avanza party, signalling renewed investor confidence in a country long beset by currency volatility and debt distress. Investors witnessed the central government bond due 2035 jumped roughly 12% to 69 cents on the dollar, the 2029 maturity rose 9 cents to 84 cents, and the local stock index, the Merval, surged about 21%.
After Sunday’s vote, Buenos Aires surged as the financial hub bearing the brunt of the market response, where it lies in the perception that Milei’s political mandate now affords greater ability to push through pro-market reform and thereby reduce the risk that Argentina will default or sharply devalue the peso.
IMilei’s party secured nearly 41% of the national vote, capturing a strong position in the legislature and enabling the government to stave off fears of policy paralysis. Markets interpreted this as a green light for structural economic reform in a nation facing about US$ 18 billion in foreign currency debt repayments over the next year, including a US$ 4 billion payment in January.
For Argentina, the win reduces the odds of policy gridlock and gives Milei the space to press ahead with his liberal-economic agenda, including tighter fiscal discipline, deregulation, and a more flexible exchange-rate regime. That in turn may help reduce the country’s risk premium, lower borrowing costs, and stabilise the peso in the medium term.
For global investors, the episode illustrates the heavy influence of political outcomes on emerging-market asset pricing: in particular how legislative mandates can trigger reversals of previously discounted risk. Yet, key risks remain: the durability of reforms, the sustainability of foreign support (notably from the U.S.), and the ability of Argentina’s Central Bank to defend the currency under external pressure.
Looking ahead, the focus will be on how rapidly Milei’s government moves from mandate to implementation. And, importantly, how Argentina will service its debt obligations if global commodity prices or export receipts falter. The election win is a major step, but far from a guarantee of rehabilitation. As J.P. Morgan warned, while recent policy advances are “a significant step forward,” Argentina still confronts long-standing structural problems that have stifled growth for decades.
