Mexican Finance Minister Ernesto Cordero said yields on the country’s bonds may soon turn lower again after rising from record-lows reached in October.
The yield on the 10 percent bond due in 2024 has risen 107 basis points from the 6.258 percent reached Oct. 12 amid concern Europe’s debt crisis may spread and speculation that the Federal Reserve may purchase more assets. The yield fell more than 200 basis points in 2010 through Oct. 12 as investors sought higher returns with U.S. rates near zero.
“All the conditions are present for rates to keep falling,” Cordero said in an interview with Mexico City-based Radio Formula. “We’ve had a very relevant decrease in short, medium and long-term rates.”
Cordero may have made the comments in a bid to encourage a reversal in the recent rise in yields so that the government can sell debt at lower rates, said Gabriel Casillas, chief economist for JPMorgan Chase & Co. in Mexico City.
“Interest rates throughout the curve have definitely gone down in the past few years,” Casillas said in a phone interview. “Given those rates and the central bank’s long pause, there’s space for the government to finance at lower rates.”
The yield on the 10 percent bond due in 2024 rose 13 basis points, or 0.13 percentage point, to 7.33 percent at 4:29 p.m. New York time day as employers in the U.S., Mexico’s largest trading partner, added more jobs than forecast last month.
“This is mostly on the back of U.S. yields going higher,” Jorge Perez-Duarte, a managing director for emerging markets at TD Securities Inc. in Toronto, said about today’s rise in yields. “In general terms, the Mexican curve looks attractive to investors.”