The tables have become extremely politicized, less than two weeks before the legislative elections. When to buy dollars: before or after? The game of mistrust and the “Hotel California” mode. The bad mood and doubts in the US with aid for Argentina.
There is no doubt that, given the high level of tension, not only financial and exchange rate, but also social and political, the tables have become extremely politicized, less than two weeks before the legislative elections. The question everyone is asking is no longer whether they should buy or sell dollars, but rather whether to buy today or later. The dollarization of portfolios, expected as in every pre-electoral period, continues its march like that of the Emperor penguins and is not stopped by a tweet from Scott. Although the decibels have dropped compared to weeks ago, there is nothing more similar in the exchange of sell and buy orders, and even between the “research” bunkers than the distrust gamealmost a carbon copy of the famous “liar’s poker” played by the bosses and young traders of the famous Wall Street investment bank, Salomon Brothers.
Perhaps, who best portrayed the momentum was one of the consulting firms most in demand by the market when it summarized the current dilemma like this: Was Trump’s aid until October 27 or ’27? Which speaks of the level of uncertainty exacerbated beyond electoral logic. They said in a financial bunker that everything seems very tied with pins and that no matter how much the US Secretary of the Treasury continues to publish tweets or declare his unconditional support for President Milei, no one is clear how it will be reflected after October 26. What’s more, he pointed out, one of the main swords of the consulting firm that Everything was so strange that even the position of Central Bank Repos (BCRA), that is, the liquidity window, was negative until after the visit to the White House..
In a counterpoint with peers from an international table, they recognized that Trump and Bessent’s announcements, and above all the incredible interventions in the local exchange market by the US Treasury, had deactivated the economic bomb, at least until the elections. But this did not imply that some other political bomb was not activated, in reference to the Espert case. In this regard, a political consultant explained that now under the final sprint of the campaign anything goes and anything plays, because it is no longer like before when the campaign lasted two months, now what defines are the last 15 days before the elections, especially in the digital world. A colleague who spoke at one of the main private banks highlighted the influence that the so-called “streamer voters”many of them who did not go to vote in the recent elections, and who are not contaminated by the information gap.
How the Argentine rescue farce affects the US
The entire Argentine rescue farce not only has repercussions locally but also abroad, especially in the United States, of course with different intensity. Rather, from what is heard, commented and read, There is not only bad humor with the aid to Argentina but also many doubts. In a dialogue within the PIIE with the prestigious economist and academic, Maurice Obstfeld, this was evident. The only thing that Obstfeld rescued from the Argentine case, when questioned, since he was going to talk about trade and the international financial system, was that the swap was not from the Fed, because that had different implications than that done by the US Treasury. In addition, the Fed usually provides currency swaps, but to the central banks of the largest developed countries. The economist also pointed out that the Treasury swap should be made at the same exchange rate as when Bessent buys pesos, that is, when Argentina returns the dollars and recovers the pesos it must be at the same rate, so there is no effect for US taxpayers, however, the purchase of Argentine debt can have undesired effects. The same with Treasury interventions buying pesos. There are reservations, then, about how Argentina will return the dollars that the US gives it if it fails to buy international reserves. Obstfeld opined that, in that case, following Bessent’s “whatever it takes” criterion, the swap will be renewed indefinitely or even increased. God will say. The truth is that, as one influential emerging markets manager pointed out, the market is in “Hotel California” modein reference to the famous ’70s Eagles song that says: “you can leave whenever you want, but you can never leave.”
JAVIER MILEI AND DONALD TRUMP
Presidency
The roller coaster of rates
Scene, roast of financial golfers, several of them recent arrivals from the Old Continent to which they had traveled under an attractive invitation to play on some courses, for only US$2,000, all included, ticket, stay and courses, which aroused the envy of the rest of the diners. Are the honeys of the “libertarian” exchange rate delay of Toto & Co.explained one of the traveling players. Although they were linked to the events, the exchange of data intensified at meal time. There it was discussed how in the last rounds the market continues under strong exchange rate pressures added to a new interest rate shock (the BCRA ran out of several liquidity windows), which for now cannot be effective to control the pressures on the dollar. So The roller coaster of rates once again drove the market and, above all, the peso takers crazy.
A well-known peso operator explained that, when overnight rates operate above the 30-day rate (TAMAR)the market enters a kind of reversal of flows, where the pesos leave the banking system and the fund industry to be channeled towards the surety market, and which, although it does not seem to have a direct effect on the dollar, it does injects more noise into the money market equilibrium and leads investors to be super short. For this reason, there was not much “rollover” of LECAP because liquidity had to be recovered under the rule of the daily bank reserve scheme. Apparently that mountain of pesos released by the Treasury put some pressure on the crazy rates in the last tender before the elections. The host, with a high handicap, commented that After Don Bessent bought pesos, the sale of linked dollar bonds was reversedbut everything still looks confusing, although the prices look attractive if the bands survive. Of course, they recognize that Bessent’s “hand” in the exchange market changed the climate and led some to sell currency positions. Travelers commented that in Europe they took into account Trump’s warnings in terms of his support if Milei wins, which raises serious questions about the day after.
Almost simultaneously, from a strong Brazilian table, they agreed that Trump’s statements during his meeting with Milei generated significant political uncertainty by conditioning US financial support on the outcome of the next elections. They see that their vague reference to Milei’s “victory” generated uncertainty in the markets about whether the October legislative elections (a lower result than the opposition or political alliances?) or the 2027 presidential elections would jeopardize the continuity of US aid. According to the São Paulo vision, this ambiguity, added to the doubts and uncertainty about debt payments in dollars after the elections, impacted Argentine assets. They believe that the confusion could be due to the political intention to boost Milei’s position, internal US restrictions (legislative and social) or Trump’s lack of communication. Nevertheless, They believe that it is unlikely that the US will reverse its strategic support for Argentina in the electoral scenario, therefore, they continue to “overweight” Argentine equities.
“The people want to know”
What made a lot of noise was the news that JPMorgan, BofA, Goldman and Citi, among others, were negotiating with Bessent an emergency line of US$20 billion whose collateral would be Argentine assets. The key issue is the specific guarantees involved. We will see. For now, “The people want to know” if American support lasts until the current legislative elections or until the presidential elections of 2027. It is also clear that the consensus sees that the US views Argentina as a strategically valuable and unconditionally loyal partner in South America, and The Trump administration is reviving a Monroe-style influence policy aimed at curbing China’s presence in the region. Some of this was also heard in the halls of the BECON Latin American Investment Forum in the beautiful coastal town of Montauk, on Long Island, under the sponsorship of Neuberger Berman, where clients and investors from all over Latin America gathered to share investment ideas and the dynamics of global financial markets. During the coffee breaks, no one hid the unprecedented exchange rate intervention of the US Treasury in Argentina, but everyone pointed out that until October 26 it was clear that the Government was going to strictly maintain the band exchange rate scheme, so the question is how it continues on October 27, if it tries to loosen or recalibrate the bands, or if with the attempt to “carry trade” to infinity and the explicit support of Bessent will seek to sustain the scheme until 2027.
Source: Ambito
I am a 24-year-old writer and journalist who has been working in the news industry for the past two years. I write primarily about market news, so if you’re looking for insights into what’s going on in the stock market or economic indicators, you’ve come to the right place. I also dabble in writing articles on lifestyle trends and pop culture news.
