(Bloomberg) -- Argentine President Mauricio Macri’s surprise selection of Senator Miguel Pichetto as his running mate scored an early stamp of approval from the bond market.
Yields on Argentine sovereign debt dropped by the most since August 2016, according to data compiled by JPMorgan Chase & Co., amid optimism that Pichetto, an opposition leader who has at times criticized his government, will bolster Macri’s appeal with moderate voters in the October election.
Macri’s decision to reach across the aisle came a month after rival Cristina Fernandez de Kirchner shocked investors by accepting an invitation to be moderate Alberto Fernandez’s running mate. Both candidates are seeking to appeal to a large swath of undecided voters as polls show a tight race.
“It has the possibility of reshaping the election race by turning what was a three-horse race into now a two-horse race,” said Patrick Esteruelas, a senior analyst at Emso Asset Management in New York. “It probably leaves the market more comfortable about what governability would look like in a Macri second term.”
The peso may also advance Wednesday, testing a 50-day moving average that has capped gains since February. The currency closed Tuesday at 44.70 per dollar. Still, support could fade in a few days, judging from the market’s reaction after Fernandez de Kirchner joined Fernandez’s ticket. At the time, the peso fell almost 1%, only to erase losses days later. It’s down more than 15% so far this year, leading global declines.
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