Trump's Congressional defeat fractures Argentina's lifeline as risk premium hits 925 basis points.

Argentina's country risk closed Thursday at 925 basis points, its highest level since the October 2025 midterm elections, after the Nasdaq plunged 5.5% and the S&P 500 lost 4.4% in Wall Street's worst session of the year. What makes this move qualitatively different from previous bouts of turbulence is not its magnitude —though it is considerable— but the combination of factors feeding it simultaneously: external pressure from a global market in risk-off mode, the geopolitical realignment following Donald Trump's electoral defeat in the U.S. Congress, and a domestic economy that Deputy Economy Minister José Luis Daza himself described at the ABECEB Forum as "very weak" and growing "less than expected." When the three vectors converge in the same direction, the result is what markets saw today: sovereign bonds falling as much as 3% in their longer-duration issues, the Merval retreating 4.1%, and gold —the only asset to rise during the session— confirming that the world has entered a safe-haven cycle that Argentina is in no position to exploit.

Consulting firm LCG summarized the deterioration with political precision: "the network of political affinities, both symbolic and real, that the Government counted on has finally broken." The defeat of Trump's Republicans in the U.S. midterms —with Democrats regaining control of both chambers of Congress— carries direct and concrete consequences for Buenos Aires. Gary Litman, senior vice president of the U.S. Chamber of Commerce, was explicit at the same ABECEB Forum where Daza and Minister Federico Sturzenegger were speaking: "decision-making will be slower, the political will won't necessarily be there, and the willingness to use the IMF or other instruments to come to the rescue diminishes when we have a divided government." AmCham Argentina reinforced the diagnosis in its own report, warning that the new map of Capitol Hill could constrain both the bilateral trade relationship and financial support instruments. Minister Caputo downplayed the risk in his appearance at FIEL —"for Argentina nothing changes, the relationship won't change"— but the market signal was diametrically opposed. Two-year credit default swaps reached 972 basis points, their highest level since the 2025 elections, with an implied default probability of 24%.

What amplifies Argentina's vulnerability to any external shock is the structural weakness of the domestic cycle, which today was exposed by an unusual accumulation of bad news. Poverty rose to 34.4% of the population in the second quarter of 2026, according to calculations by the Universidad Católica Argentina based on Indec data, with 16.5 million people below the poverty line and 3.8 million in extreme poverty. Consumer credit has now posted six consecutive months of real decline, with credit cards retreating 12% year-on-year. Capital goods imports fell 13.9% by volume between January and September, an unequivocal signal that private investment is not taking off at the pace the Government had expected. Sturzenegger himself, in one of the most revealing moments of the ABECEB Forum, turned to an academic study on Asian economies to justify why in Argentina investment "takes time to arrive," comparing the local process with the transformations of China, South Korea, Singapore and Taiwan. It is an argument that is academically sound and politically awkward: the businessmen present at the same forum agreed that larger-scale investments will wait until 2028, when there is greater political certainty, and that the RIGI is, for now, the only concrete bet on the table.

In that context, the Treasury's intervention in the peso debt market took on unusual relevance. Consulting firm 1816 detected government purchases of approximately two trillion pesos in dual bonds and long-dated CER-linked securities, operations that appear to have sought to set a ceiling of TAMAR plus 10 percentage points in nominal annual yield for issues maturing in 2029 and 2030. The maneuver produced explosive gains —of up to 4.3%— in the longest inflation-linked bonds, on a day when BYMA trading volume hit a record. The Central Bank, for its part, has accumulated more than USD 16 billion in foreign currency purchases since January, exceeding by more than 60% the annual target agreed with the IMF, although gross reserves briefly dipped below USD 50 billion following a payment to the Fund.

Retail and industry offered their own reading of the deterioration today. Automotive production fell 14.4% year-on-year in October and has accumulated a 15.5% decline so far this year, with seven consecutive months of year-on-year drops according to Adefa. Banco Nación tried to stimulate consumption with a rate cut for secured loans to 25% nominal annual, and the Government formalized the suspension of tax levies on SMEs until June 2027 and expanded ARCA's payment facilities plan to cover debts due through October 31. These are measures welcomed by the UIA but that the entity's president, Martín Rappallini, acknowledged as insufficient: the industrial sector's decline since November 2023 reaches 7.4%, with nearly 95,000 jobs lost. Market consensus, according to the November LatinFocus survey, projects the economy will grow just above 1% in 2026, with inflation of 30.4% at year-end and a wholesale dollar around 1,590 pesos by December. For 2027, the same consensus anticipates inflation of 23.3% and an exchange rate approaching 2,000 pesos by October, coinciding with the presidential elections.

What needs to be watched closely in the coming weeks is a handful of variables that could make the difference between manageable turbulence and a deeper crisis of confidence. The first peso debt auction of November, in a month of heavy maturities, will say a great deal about the local market's appetite following the Treasury's intervention. The final investment decision on the Argentina LNG project, which YPF plans to sign between November 26 and 30 from Abu Dhabi, is the largest catalyst available to shift market tone. And the second RIGI Round, scheduled for December 2 at Tecnópolis with a focus on hydrocarbons and the presence of President Milei, will test whether the RIGI can become something more than a long-term tool for a business community that, today, is determined to wait.