Mexican government bonds fell to a three-week low, following U.S. Treasuries lower on speculation the Federal Reserve will scale debt back purchases further at a two-day meeting that begins tomorrow.
The yield on peso securities maturing in 2024 increased three basis points, or 0.03 percentage point, to 6.27 percent at 12:46 p.m. in Mexico City even as a local bond auction drew higher demand. The price fell 0.27 centavos to 128.86 centavos per peso as Treasuries declined for the first time in a week.
“There’s some light selling exacerbated by low liquidity and the move higher in U.S. rates,” Alejandro Silva, a founding partner at Chicago-based Silva Capital Management LLC, who helps oversee $800 million of emerging-market assets, said in a phone interview. “Investors are positioned a bit lighter.”
Fed policy makers are forecast by economists to cut monthly asset purchases supporting the economy of Mexico’s biggest trading partner by another $10 billion to $45 billion. A nonfarm payrolls report this week is forecast to show U.S. employers added the most jobs since November.
In Mexico, the National Treasury sold 3.5 billion pesos ($266 million) of 20-year fixed rate bonds as well as other securities today. The sale of the 20-year bonds drew an average yield of 7.12 percent and was 2.75 times oversubscribed, compared with 2.52 in March.
The peso rose 0.1 percent to 13.1227 per U.S. dollar as of 5 p.m. in New York.