• Argentina’s benchmark S&P Merval index surged over 6% in intraday trading following a high-profile visit from US Treasury Secretary Scott Bessent.
  • Bessent explicitly endorsed President Javier Milei’s pro-market economic reforms, signaling full US backing for the new administration’s agenda.
  • The public show of support is seen as a critical catalyst for the IMF’s recent approval of a new $20 billion Extended Fund Facility arrangement.

Argentine equities rallied sharply on Thursday, with the S&P Merval index climbing more than 6% to hit its highest level in over a month. The surge in Buenos Aires followed a high-profile visit by US Treasury Secretary Scott Bessent, who met with President Javier Milei and key economic officials to voice the Biden administration’s strong support for the country’s ambitious economic overhaul.

Bessent’s remarks, delivered alongside Milei’s Economy Minister Luis Caputo, amounted to a full-throated endorsement of the government’s shock-therapy approach to tackling hyperinflation and fiscal deficits. “The United States stands firmly behind Argentina’s efforts to restore macroeconomic stability and create the conditions for sustainable growth,” Bessent said, according to a readout of the meetings seen by Roic AI. The statement was interpreted by traders as a direct signal that Washington would use its influence to ensure smooth relations with the International Monetary Fund.

The diplomatic backing comes at a pivotal moment, just days after the IMF’s executive board formally signed off on a new $20 billion Extended Fund Facility. People familiar with the negotiations said US diplomatic pressure was instrumental in securing the deal, which provides Argentina with immediate liquidity and restructures its existing debt obligations to the Fund. “Without this level of US support, the IMF arrangement would have faced significantly more hurdles,” said one source, who asked not to be identified because the discussions were private.

Market participants reacted swiftly to the reduced political risk. Beyond the equity surge, sovereign bond prices also edged higher, while the country risk premium, as measured by the EMBIG index, tightened. “Bessent’s visit is the clearest signal yet that the US is all-in on Milei,” said a senior trader at a local brokerage. “For investors, it de-risks the bet on Argentina’s reform story, at least in the near term.”

The Milei administration has launched a sweeping package of reforms, including massive public spending cuts and deregulation, aimed at curbing an annual inflation rate that exceeds 250%. The policies have been met with public protests but have so far been welcomed by international financial markets. Efforts to reach a spokesperson at the Economy Ministry for additional comment were unsuccessful late Thursday.

While the immediate market reaction has been positive, analysts caution that the government’s ability to implement its agenda fully and maintain social stability remains the key test. The US endorsement, however, provides a crucial buffer as the administration navigates a deeply challenging economic landscape.