IMF Candidate Carstens Wins Over Bond Investors: Mexico Credit

Bond traders’ confidence is growing in Mexican central bank Governor Agustin Carstens’s ability to hold down inflation in Latin America’s second-biggest economy.

The yield gap between government debt tied to inflation and fixed-rate notes, a gauge of investor expectations for annual price increases over the next three and a half years, tumbled 116 basis points since March 7 to a four-month low of 3.5 percentage points. As concern about inflation wanes, traders are pushing back their estimates for when Carstens, a candidate to head the International Monetary Fund, will begin raising the benchmark rate to December, futures trading shows.