Argentine President Javier Milei unexpectedly triumphed in the midterm elections, earning a crucial public endorsement for his radical austerity policies and providing a sigh of relief for the U.S. government, which previously extended $20 billion in currency swap support to the country.

On October 27, media reports stated that Guillermo Francos, Argentina's Minister of the Interior, announced on Sunday (October 26) that with 92% of votes counted, Milei's Libertarian Party secured 41% of the votes, significantly ahead of the main opponent, the Peronist Party, which garnered 24.5%. Francos indicated that Milei's party won 64 of the 127 seats up for election in the House of Representatives.

With the uncertainty surrounding the elections cleared, markets are expected to rise on Monday. Currently holding about 15% of the seats in the House, this victory will strengthen Milei's foothold in Congress, bringing him closer to, or even over, the critical one-third threshold required to protect presidential vetoes from being overturned by the opposition.

These elections are crucial for Argentina's political and economic landscape. A defeat in September's local elections led to a sell-off of the peso, raising concerns among investors about Milei's governance. This ultimately prompted the U.S. intervention to support the peso and the Argentine government. Previous reports suggested that U.S. Treasury Secretary Janet Yellen signed a $20 billion currency swap agreement before the elections and directly purchased pesos to stabilize the exchange rate.

A Dramatic Political Turnaround from Defeat to Victory Milei, having faced a significant setback in the September Buenos Aires provincial elections, managed to achieve a political turnaround in just two months.

These midterm elections involved a vote for half the House of Representatives and a third of the Senate, representing a critical referendum on Milei and his radical austerity policies. Reports indicate that the Libertarian Party's lead in most provinces has significantly reversed its previous political slump. The Peronist Party's share of votes plummeted from an overwhelming advantage in the local elections last month to 24.5%, signaling a significant shift in voter sentiment.

This victory will substantially increase Milei's party's representation in the House from approximately 15% to a level that can secure the one-third threshold necessary to protect presidential vetoes. In recent months, opposition lawmakers have frequently succeeded in overturning Milei's vetoes, but the new allocation of seats will alter this power dynamic.

The electoral win could help Milei turn a new political page. This year, the president and his party have faced three corruption scandals, while economic slowdown and a high unemployment rate have pushed Milei's approval ratings to the lowest point of his term.

The success in the midterm elections provides a more robust congressional foundation for Milei to pursue essential economic reforms. A higher proportion of seats implies greater leeway for Milei to advance his austerity measures and structural reform bills, without excessive reliance on opposition support or fear of vetoes being overridden.

For investors, the election outcomes have eliminated the greatest uncertainty surrounding Argentina's policy continuity and reduced the risk that U.S. large-scale financial support could go to waste. The anticipated market rebound on Monday will reflect confidence in the continuation of Argentina's reform path.

U.S. Gambles Reap Rewards The election results also validate U.S. Treasury Secretary Janet Yellen's extraordinary support for Argentina. Just before the elections, the U.S. signed a $20 billion currency swap agreement to bolster the struggling peso, which has depreciated over 30% this year.

Reports highlight that U.S. involvement extended beyond this. Washington directly purchased pesos before the vote and coordinated with Wall Street banks to provide additional financial support for Milei's government.

Two weeks ago, President Trump met with Milei at the White House, where Milei has emerged as one of the American leader's most enthusiastic supporters abroad. Reports suggest that U.S. backing is layered atop the $20 billion aid program initiated by the International Monetary Fund in April this year. Argentina's bonds, which had the highest increase among emerging markets last year, suffered severe damage due to the September election loss and the U.S. bailout plan.

With the uncertainty of the elections resolved, these assets are expected to see a rebound.