Mexican Peso Bond Yields Tumble as Stimulus Speculation Mounts

Mexico’s peso bond yields fell to a record low on speculation global policy makers will coordinate efforts to bolster economic growth, supporting higher-yielding assets.

The yield on Mexican local-currency bonds due in 2024 dropped four basis points, or 0.04 percentage point, to 5.39 percent at 4 p.m. in Mexico City, according to data compiled by Bloomberg. The bonds’ price increased 0.38 centavo to 141.74 centavos per peso. The peso was little changed at 13.3337 per U.S. dollar.

Demand for emerging-market debt picked up as speculation mounted the European Central Bank will cut interest rates to a record low tomorrow to spur economic growth. A gauge of German services fell to 49.9 in June, less than the earlier reading of 50.3, according to London-based Markit Economics, with a figure below 50 indicating contraction. Other reports showed euro-area services and manufacturing output declined for a fifth month.

“You can assume that investors are anticipating more liquidity,” Rafael Camarena, an economist at Banco Santander SA (SAN) in Mexico City, said by telephone from Mexico City. The bonds “are responding to that, above all on the long end” of the yield curve, he said.

U.S. markets were closed today for the Fourth of July holiday.

To contact the reporter on this story: Ben Bain in Mexico City at bbain2@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net