Speculators seeking to profit from the selloffs racing through Argentina\u2019s markets were stopped dead in their tracks by a powerful investor willing to take the opposite side of the trade: The US government.<\/p>\n
The strong show of support for President Javier Milei from US Treasury Secretary Scott Bessent \u2014 first by pledging to use \u201call options,\u201d and then by announcing a plan to potentially provide a\u00a0$20 billion lifeline<\/a>\u00a0and buy Argentina\u2019s bonds \u2014 quickly halted a rout that was burning through the government\u2019s reserves as it fended off a run on its currency.<\/p>\n Whether the money materializes or not, investors said the prospect alone will likely be enough to put a floor under Argentina\u2019s stocks, bonds and currencies ahead of key national elections late next month. That\u2019s because few, if any, are willing to stand behind a bearish bet that could get blown up by another US signal of support.\u00a0<\/p>\n \u201cThat\u2019s an outsized package and coming from Scott Bessent \u2014 who understands markets \u2014 it should stabilize here,\u201d said Ray Zucaro, chief investment officer at RVX Asset Management LLC in Miami, who currently has a neutral view on Argentina\u2019s bonds. \u201cIt is hard to be short.\u201d<\/p>\n data-srcyload <\/p>\n The potential intervention \u2014 which traders likened to Bill Clinton\u2019s rescue of Mexico in the mid-1990s \u00a0\u2014 offers a rare break from the Trump administration\u2019s brand of economic nationalism, in this case to help a besieged ideological ally in a country whose financial crises have had little impact on the US.<\/p>\n Milei, a libertarian economist who ushered in free-market shock therapy aimed at ending the crises that have shadowed the country for decades, had some success in taming runaway inflation. But a political scandal surrounding insiders in his administration and voter anger at some of his spending cuts handed him surprisingly large defeats in recent local elections, raising fears among investors that his reforms could stall if he suffers a setback in the national midterm vote on October 26.<\/p>\n