Mexico Peso Bonds Fall as Fed Sees Economic Activity Improvement

Mexico’s peso-denominated bonds fell after the Federal Reserve said it saw improvement in the U.S. economy, a sign the central bank may soon taper stimulus that has pushed investors to higher-yielding emerging markets.

Yields on peso bonds due in 2024 rose three basis points, or 0.03 percentage point, to 5.94 percent today in Mexico City, the third straight yield increase, according to data compiled by Bloomberg. The price fell 0.33 centavo to 132.94 centavos per peso. The currency fell 0.1 percent to 12.9349 per U.S. dollar at 3 p.m. in Mexico City.

While the Fed said it would maintain $85 billion of monthly bond purchases, the central bank saw signs of “underlying strength” in economic activity. The Fed was expected to maintain asset purchases until its March meeting, according to a Bloomberg survey of analysts.

“People thought they would say something about how the economy was weak, but they said the opposite, Roberto Ivan Garcia Castellanos, a bond trader at Casa de Bolsa Finamex SAB, said in a telephone interview from Guadalajara.

To contact the reporters on this story: Ben Bain in Mexico City at bbain2@bloomberg.net; Jonathan Levin in Mexico City at jlevin20@bloomberg.net

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

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