Key Facts
• On September 7, Buenos Aires election results showed Milei’s party suffered a major defeat.
• Argentina’s dollar-denominated bonds recorded the largest drop in emerging markets.
• Yield on 2035 bonds surged to just below 13%.
• Argentine peso briefly fell 7% in local trading, stabilizing at 1 USD = 1,430 pesos.
• Peso’s trading cap is set at 1,470 pesos; central bank intervention likely if breached.
• Argentina’s stock market saw its steepest intraday drop since 2020.
• Global X MSCI Argentina ETF fell over 10% in New York trading.
• Shares of Argentine companies listed in the U.S., including Banco Macro and Pampa Energia, declined significantly.
• Milei’s party trailed the left-wing opposition by nearly 14 points with 99% of votes counted.
• Investors expected a 5-point loss but were disappointed by the worse-than-expected results.
Summary
Argentina’s financial markets faced significant turmoil following the defeat of President Javier Milei’s party in the Buenos Aires provincial election on September 7. Concerns over the sustainability of Milei’s economic reforms intensified as his political base weakened. Dollar-denominated bonds saw the largest drop among emerging markets, with 2035 bond yields nearing 13%. The Argentine peso fell sharply, stabilizing at 1,430 pesos per dollar, while the stock market experienced its steepest decline since 2020. In New York, the Global X MSCI Argentina ETF dropped over 10%, and shares of Argentine companies listed in the U.S. also suffered losses. Milei’s party underperformed expectations, trailing the left-wing opposition by nearly 14 points, amplifying investor disappointment and accelerating asset sell-offs.
