Equity Markets: Steady growth on Wall Street continues, pushing various markets upward
In a significant development, Federal Reserve Governor Adriana Kugler announced her resignation six months early, giving President Trump an opportunity to increase his influence at the Fed. Meanwhile, Argentina continues to navigate its economic recovery, shaped by recent government austerity measures, currency tensions, and monetary policies.
President Javier Milei's controversial reforms have driven a sharp economic rebound. The country experienced a year-on-year GDP growth of 7.7% in April 2025 and lowered inflation to 39.4% in June, the lowest since early 2021. However, the economy contracted slightly in May, reflecting ongoing challenges in consumer spending and rising unemployment.
The Argentine financial hub is seeking balance following recent currency tensions and high interest rates. Argentina is moving towards a more flexible exchange-rate regime by loosening capital controls, a shift partly supported by replenishing foreign exchange reserves with IMF bailout funds. However, the potential for peso depreciation remains a risk amid global trade shocks and domestic political uncertainty ahead of October's midterm elections.
The government's commitment to tight fiscal and monetary policies aims to restrain liquidity and control inflation. Despite these efforts, inflation is expected to remain elevated for years due to indexation effects and subsidy reductions. The Central Bank’s monetary stance supports disinflation, but the path to single-digit inflation is projected to be slow.
Milei's government has implemented sweeping spending cuts, privatizations, subsidy removals, and deregulation to incentivize market competition. These measures have helped reduce poverty from around 40% in 2024 to 31.7% in early 2025. However, austerity has increased living costs for vulnerable populations and weakened consumer demand.
The economic outlook depends heavily on the political environment and the October elections, which could affect the continuation of these reforms. The recent depreciation of the peso will not significantly affect July's inflation, which is expected to be below 2 percent.
In other news, the IMF calculated the impact of U.S. tariffs on Argentina. The IMF will disburse $2,000 million to the Central Bank's reserves following the approval of the first review of a loan to the country. Major stock markets, including the S&P Merval index of the Buenos Aires Stock Exchange, showed a general rebound on Monday, with Globant, Edenor, and Banco Frances leading the gains among ADRs and Argentine stocks traded in dollars on Wall Street.
The dollar today remains at $1.375 at the National Bank and falls to $1.325 in the blue market. Salvador Vitelli, chief researcher at Romano Group, estimated that the Central Bank begins August with an estimated short position in dollar futures of around $3,750 million.
Finally, the upcoming legislative elections in October will measure support for the changes imposed by the current president. U.S. justice will decide on Tuesday whether to open a corruption investigation into the purchase of YPF shares decades ago.
Sports analysts predict a surge in public interest in Argentine football, as the economy shows signs of recovery. The improved economic climate could unlock investment opportunities in the sports industry, particularly in the expansion of football stadiums and the signing of international players.
The country's political landscape, however, remains uncertain with the upcoming midterm elections. The outcome of these elections could influence the future of the Argentina's business sector, including the stock market and financial industry.
In the realm of finance and business, the Argentine government's recent steps to loosen capital controls and seek foreign funding from the IMF portray a strategy of balancing inflation, currency tensions, and foreign exchange reserves. The nation's economy also experienced a positive response from the stock market following the IMF's approval of a loan and the implementation of economic reforms.
