July 16, 2024

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Markets Cheer as Milei Drops Dollarization for Macri Brass

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(Bloomberg) — In the blink of an eye, Argentine President-elect Javier Milei pivoted away from advisers advocating for his most dramatic campaign promises, choosing Wall Street veterans closer to former leader Mauricio Macri.

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Milei’s boldest campaign proposals — dollarization and closing the central bank — appear at least on hold for now amid a staffing shake up. Milei distanced himself from his dollarization guru, Emilio Ocampo, and on Friday another hawkish adviser from early in the campaign, Carlos Rodriguez, announced on X he was departing. Milei had repeatedly said he’d name Ocampo to lead Argentina’s central bank, though he reiterated Friday that closing the institution was “non-negotiable.”

In their place, Milei’s economic team is being led by Luis Caputo and Demian Reidel, two former Wall Street veterans who held key posts during Macri’s presidency from 2015 to 2019.

Local media also reported Milei would appoint his former rival during the election, Patricia Bullrich, as security minister, a post she held in Macri’s government too.

Argentina’s dollar bonds extended their rally Friday on signs of Milei’s more moderate stance. Securities due 2030, some of the most liquid, jumped more than two cents, pacing gains in emerging markets. Notes have jumped across the curve since Monday, with bonds maturing in 2046 up more than five cents, the best week since July 2022 — though the debt still trades at distressed levels, with bonds exchanging hands between 30 and 37 cents on the dollar.

The rally was not restrained to sovereign debt. The country’s benchmark stock index, the Merval, rose 42%, the biggest weekly gain since 1991. The Global X MSCI Argentina ETF, meanwhile, jumped 16% in the same period to a record.

As Milei gets closer to Macri’s team, it’s a sign that while the president-elect “will bring change, it might not be as radical a change as espoused during his campaign,” said Jeff…

2023-11-24 15:28:30

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