Peru Yields Rise as View Fed to Defer Stimulus Damps Risk Demand

Yields on Peru’s sol-denominated bonds rose to a two-week high as speculation the Federal Reserve will defer additional stimulus for the world’s largest economy damped demand for emerging-market assets.

The yield on the nation’s benchmark 7.84 percent bond due in August 2020 climbed two basis points, or 0.02 percentage point, to 4.62 percent at 12:57 p.m. in Lima, extending the week’s advance to three basis points, according to prices compiled by Bloomberg. The price declined 0.15 centimo to 121.14 centimos per sol.

In the U.S., the index of leading economic indicators climbed more than forecast in July, and consumer confidence unexpectedly improved this month, signs of sustained expansion. European stocks rose to a 13-month high amid optimism policy makers will take steps to protect the region’s banks.

“The mood is slightly more positive in Europe and in the U.S. the situation isn’t catastrophic either,” weakening the case for additional stimulus, said Alberto Jabiles, a trader at BBVA Banco Continental in Lima.

The bond’s yield fell to 4.53 percent on Aug. 2, its lowest since at least 2006, as speculation the Fed will step up bond purchases to spur growth boosted demand for emerging-market debt.

The sol was little changed at 2.6130 per U.S. dollar, according to Deutsche Bank AG’s local unit. The currency earlier touched 2.6110, which data from Peru’s financial regulator show is the strongest level since 1997.

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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