Mexico Bonds Yields Decline Before Inflation Report; Peso Falls

Mexico’s peso bonds gained for the first time in 2013 as speculation mounted that slowing inflation will prompt the central bank to maintain benchmark interest rates at a record low.

Yields on fixed-rate government debt maturing in 2014 fell one basis point, or 0.01 percentage point, to 4.8 percent at 4 p.m. in Mexico City, according to data compiled by Bloomberg. The peso dropped 0.3 percent to 12.8030 per dollar.

A report tomorrow will show annual inflation slowed to 3.76 percent in December from 4.18 percent the prior month, according to the median forecast of 12 economists surveyed by Bloomberg. Shorter-term bonds are rallying as investors become increasingly confident that policy makers won’t raise the 4.5 percent benchmark rate as inflation eases to within their target range of 2 percent to 4 percent, according to Rafael Camarena, an economist at Grupo Financiero Santander Mexico SAB.

“The topic of inflation is more reflected in the shorter- term or medium-term debt,” Camarena said by phone from Mexico City. “There are expectations for good inflation data tomorrow.”

The government sold all 5 billion pesos of 28-day bills that it offered at auction today, according to the central bank. The Finance Ministry also auctioned 7 billion pesos of 91-day securities, 9 billion pesos in 182-day notes and 9.5 billion pesos in 364-day bills, all known as Cetes.

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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.