Peru Bond Yields Fall to Record Low on Fed Stimulus Speculation

Peruvian bonds rose, pushing yields to a record low, as speculation the Federal Reserve will expand monetary easing boosted the outlook for global growth and fueled demand for higher-yielding assets.

The yield on the nation’s 7.84 percent sol-denominated bond due August 2020 fell one basis point, or 0.01 percentage point, to 4.47 percent, according to prices compiled by Bloomberg. The yield fell five basis points this week. The price rose 0.11 centimo today to 122.18 centimos per sol.

Treasuries and gold rose after U.S. payrolls increased less than projected in August, spurring bets Fed policy makers will expand record monetary stimulus next week.

Investors are looking for “opportunities in countries that have a solid fiscal position and are still growing,” said Hugo Perea, the chief economist at BBVA Banco Continental in Lima. “Peru is a country that offers a higher yield and risk is relatively low.”

The sol was little changed at 2.6080 per U.S. dollar, from 2.6090 yesterday, according to Deutsche Bank AG’s local unit. The currency appreciated 0.1 percent this week.

The central bank bought $60 million in the spot market today to stem gains in the sol. The monetary authority said on its website it paid an average 2.6090 per dollar.

Policy makers kept the overnight rate at 4.25 percent yesterday, citing a weaker global economy, a sustainable pace of domestic growth and tolerable levels of inflation.

Inflation is likely to ease next month as prices of some fruits and vegetables fall on higher farm output, central bank research director Adrian Armas told reporters on a conference call today.