CNN

A key Trump ally won an election. It could be good news for US taxpayers

<i>Rodrigo Abd/AP via CNN Newsource</i><br/>Argentina's President Javier Milei celebrates after winning in legislative midterm elections in Buenos Aires

By CNN Newsource

Published October 27, 2025 4:09 pm

By John Towfighi, CNN

(CNN) — Argentina’s stock, bond and currency markets surged Monday after a decisive victory by a MAGA ally of US President Donald Trump — and a $20 billion lifeline from the United States.

President Javier Milei’s win is a victory for Trump — and potentially for the US taxpayers funding that rescue of one of South America’s biggest economies.

Argentina’s benchmark Merval stock index soared 22%, while government bonds rallied sharply, pushing yields lower. The Argentine peso surged as much as 10% against the US dollar before paring gains.

Milei’s party, La Libertad Avanza, secured better-than-expected victories in midterm legislative elections on Sunday. The win gives Milei a fresh opportunity to try to enact economic reforms and stave off concerns of a financial crisis, analysts said, boosting investor confidence.

“After weeks of political turbulence and pronounced market volatility, President Javier Milei has emerged with a commanding mandate from the Argentine electorate,” economists at JPMorgan Chase said in a note.

The win halted a recent slide in the Argentine peso after weeks of financial market turbulence. The US government earlier this month announced a $20 billion currency swap to support the peso as well as outright purchases of pesos.

“President Milei has a renewed mandate for change,” US Treasury Secretary Scott Bessent said Monday in a statement on social media. “We look forward to continued steps toward economic freedom that will attract private sector investment and job creators, bringing prosperity to the Argentine people.”

The midterm victory presents a chance for Milei to push forward with reforms that have drawn the ire of critics but support from allies including the Trump administration.

“The breadth of his victory, coupled with expanded representation in Congress, places his administration in a prime position to capitalize on the political and financial backing extended by Washington,” JPMorgan Chase economists said in a note.

Markets cheer Milei’s victory

Since assuming office in late 2023, Milei has wielded a chainsaw approach to government reform in Argentina. He has slashed government spending and tried to implement free market policies in part to rein in runaway inflation. A win by the opposition political coalition, the Peronists, could have derailed those reforms.

But Milei’s La Libertad Avanza party secured roughly 41% of the vote on Sunday, beating out the Peronist coalition by a substantial margin.

Notably, Milei’s party secured more than one third of the seats in the lower house of Congress. That means the opposition could no longer have the necessary two-thirds of legislators’ votes to override presidential vetoes. However, he will still need support from centrist and center-right lawmakers to pass legislation, Alejo Czerwonko, CIO for emerging markets Americas at UBS, said in a note.

Investors cheered Milei’s victory. The Global X MSCI Argentina exchange-traded fund, which tracks the Argentine stock market, soared 19% and posted its best day on record.

Argentina’s markets were beginning to fracture in recent weeks, with the peso tumbling and bond yields rising as investors became increasingly skeptical of Milei’s ability to enact reforms. The US government’s intervention to buy Argentine pesos extended a lifeline to Milei.

The “strong and conclusive performance” by Milei’s party in the midterm elections led to a “sharp repricing” of Argentine assets as risks diminished and the outlook for the economy improved, according to Alberto Ramos, head of LatAm economics at Goldman Sachs.

“This should give Milei’s administration a fresh endowment of legitimacy and political capital, which if well used to build broader political alliances, should strengthen governability and the outlook for key reforms,” Ramos said. “That also bodes well for the continuation of US financial support.”

Trump had said in recent weeks that US support for Milei was contingent on his political success. Milei himself will be up for reelection in 2027.

“Our confidence in him was justified by the People of Argentina,” Trump said in a post on social media early Monday.

But economists warned Argentina’s assets — and the US government’s bet on Milei’s success — still face hurdles.

“The rally is not a sign that Argentina’s problems are over,” said Mauricio Monge, senior economist at Oxford Economics. “The Argentine peso is still overvalued, there are structural issues with growth and employment, and securing fiscal measures to ensure sound fiscal policy in the country remains crucial. But now Milei has the chance to carry out these measures.”