Peru’s Bonds Drop as U.S. Industrial Boost Damps Stimulus Bets

Peruvian dollar bonds fell, pushing yields to the highest in five weeks, as signs of improvement in the U.S. economy curbed speculation the Federal Reserve will expand monetary stimulus.

The yield on the nation’s benchmark 6.55 percent dollar- denominated bond due March 2037 climbed four basis points, or 0.04 percentage point, to 3.87 percent at 2:14 p.m. in Lima, according to data compiled by Bloomberg. The price fell 0.82 cent to 142.25 cents per dollar.

U.S. Treasuries fell as industrial production increased in July more than forecast and after a report yesterday showed retail sales rose for the first time in four months. The Fed will hold off from a third round of bond buying known as quantitative easing in September as economic reports show signs of improvement, Goldman Sachs Group Inc. said in a report.

There’s “less probability of QE3, in the short term at least,” Bret Rosen, a Latin America strategist at Standard Chartered Bank, said in a phone interview from New York.

The sol gained 0.1 percent to 2.6145 per U.S. dollar according to Deutsche Bank AG’s local unit.

Peru’s central bank said on its website it bought $110 million in the spot market today and paid an average 2.6150 soles per dollar.

To contact the reporter on this story: John Quigley in Lima at jquigley8@bloomberg.net

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

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