Peru’s dollar bonds rallied, pushing yields to a record low, as rising U.S. retail sales and industrial output brightened the outlook for the world’s largest economy and fueled demand for emerging-market assets.
The yield on the nation’s benchmark 6.55 percent dollar-denominated bond due in March 2037 decreased four basis points, or 0.04 percentage point, to 3.50 percent at 3:37 p.m. in Lima, according to Bloomberg prices. The price rose 0.75 cent to 149.75 cents per dollar.
Treasuries fell and U.S. stocks rallied after the Federal Reserve reported that output at factories, mines and utilities rose 0.4 percent last month after a 1.4 percent decline in August. The median estimate in a Bloomberg survey of 85 economists called for production to rise 0.2 percent. The Commerce Department said yesterday that retail sales climbed 1.1 percent in September.
“Investors are searching for yield” in emerging markets, said Diego Donadio, a Latin America strategist at BNP Paribas in Sao Paulo. “The Peruvian market typically attracts a lot of attention from foreigners.”
The sol was little changed at 2.5825 per U.S. dollar, according to Deutsche Bank AG’s local unit. The central bank bought $100 million in the spot market and said on its website it paid an average 2.5827 soles per dollar.
Investors will probably increase purchases of long-duration Peruvian sol-denominated bonds as global financial markets stabilize, Daniel Chodos, a strategist at Credit Suisse Group AG, said in a research note e-mailed to clients today.
“Appealing yields, low sol volatility and strong economic fundamentals” make Peru’s local-currency-bond market attractive, Chodos wrote.
The yield on the benchmark 7.84 percent sol-denominated bond due in August 2020 fell one basis point to 4.25 percent, according to prices compiled by Bloomberg.