Frontier Daily, 27 October: Argentina rips on election result; Mozambique LNG

• ARGENT '35s +23.5% to US$70 after Milei wins midterms with 41% vs 32% Peronists; peso +9.1%; Milei vows reform push

• Mozambique eurobonds +1% Friday as TotalEnergies ends force majeure on LNG project; first gas now due H1 2029

  
  

EM eurobonds inched 0.1% higher on Friday, led by 0.2% gains in the high yield segment, lifted by stronger global risk appetite after a relatively soft September US CPI inflation reading (3% yoy versus 3.1% yoy expected) did little to move consensus for a 25bps Fed rate cut in Wednesday's meeting (currently priced at 96.7% implied probability in futures markets). US 10-year yields closed Friday's session unchanged at 4% before rising 3bps to 4.03% early today on trade optimism following yesterday's news that negotiators from the US and China agreed a framework for this week's direct Trump-Xi talks. The framework is widely interpreted as paving the way for the postponement of tariff hikes in exchange for a delay to China's new rare earth licensing regime by up to a year. Meanwhile, the US government shutdown continued, now the second longest on record, adding to uncertainty around the US macroeconomic outlook.

Argentina's President Milei won a substantial victory in yesterday's midterm elections, with his party receiving 41% of votes nationally in provisional official results for the lower house vote (versus 32% for the Peronist party), giving him a strong presence in parliament well above the one-third we previously said was necessary to safeguard the presidential veto and maintain the fiscal anchor until the more important 2027 presidential election. We upgraded the ARGENT '35s to a Buy and the local currency BONTE 29.5% 2030 to a Hold just over a month ago, at the time saying we were not overly concerned about the elections. The ARGENT '35s gapped up 23.5% early in today's trading to an all-time high of US$70. One parallel exchange rate saw the peso rally 9.1% against the dollar to some of its strongest levels since mid October. Milei promised to push ahead with his reform agenda, describing yesterday's victory as a turning point.