Argentine markets are reacting with volatility to the U.S. bailout announcement, with each headline sparking both positive and negative responses. 

On Tuesday, President Javier Milei met with his U.S. counterpart, Donald Trump, at the White House. During a working lunch with journalists present, Trump said that his administration would only provide financial backing to Argentina if Milei performed well in the legislative midterm elections. National bonds and stocks plunged in response to his comments.

Economy Minister Luis Caputo subsequently claimed that the markets had misunderstood Trump’s remarks. “There was a misinterpretation, if you will, a misunderstanding, that the support of the president and the U.S. was only going to last until October 26, depending on the elections,” Caputo said in an interview. “What actually happened at the meeting has nothing to do with that.”

Then, on Wednesday, U.S. Treasury Secretary Scott Bessent told journalists that the U.S. government was working with private investment funds to create a US$20 billion facility to invest in Argentina’s sovereign debt. That, plus the US$20 billion currency swap announced previously, would total US$40 billion. The U.S. Treasury also bought pesos in the Argentine foreign exchange market again, for the second time in a week.

Bessent’s remarks on Wednesday seemed to soften his and Trump’s comments during the meeting with Milei that U.S. funding would only materialize if Milei had a good election: Reuters news agency reported that the U.S. would give Argentina financial support as long as the government pursues “good policies,” regardless of the election results.

Markets celebrated — Argentine businesses trading on Wall Street through American Depositary Receipts (ADRs) jumped by up to 28%, led by biotech Bioceres. Dollar-denominated bonds rebounded up to 8% on Wall Street, led by the Global 2038.

Independent financial analyst Gustavo Ber said the Argentine markets currently have “heightened sensitivity to headlines” and the upcoming midterms “are taking on increasing relevance from a political and economic standpoint.”

“This is because the central objectives would be to achieve political consensus to promote structural reforms and accumulate reserves, in an effort to sustainably reduce country risk and regain access to refinance maturities,” said Ber.

Analysts are still not sure whether the government will abandon its current banded exchange scheme and devalue the peso after the elections.

“We are in a period of uncertainty, and the market is operating accordingly,” Gustavo Quintana, an analyst and broker for PR Corredores, told the Herald. He said the US Treasury’s interventions in the Argentine foreign exchange market supplemented the role of Argentina’s Central Bank and Treasury in curbing the U.S. dollar exchange rate. 

“As always happens in Argentina in pre-election periods, the tendency to dollarize activates demand and reduces supply,” he said, adding that volatility will continue “at least” until the midterm elections.