Mexico’s Inflation-Linked Bonds Rally on Rising CPI; Peso Gains

Mexico’s inflation-linked bonds rallied after consumer prices rose more than analysts forecast in the first half of February.

Yields on the inflation-linked bonds, known as Udibonos, due in December fell four basis points, or 0.04 percentage point, to 1.22 percent at 4 p.m. in Mexico City, according to data compiled by Bloomberg. It’s the first yield decline for the bonds since Feb. 12. The peso increased 0.3 percent to 12.7037 per dollar.

Investors drove down the yield of inflation-linked bonds today after the national statistics agency said prices climbed a 0.24 percent in the first half in February, lifting annual inflation to 3.47 percent as of Feb. 15 from 3.25 percent in January. Core inflation also increased more than expected, fueled by an 8.4 percent jump in the cost of mobile phone service in the first half of February from two weeks earlier.

“Inflation was a bit above expectations ,” Pedro Tuesta, chief economist at 4Cast Inc., said by telephone from Washington. Higher mobile-phone fees may have caused expectations of lower inflation to revert, he said.

Yields on fixed-rate Mexican government bonds due in 2024 fell two basis points, or 0.02 percentage point, to 5.06 percent, according to data compiled by Bloomberg. The price rose 0.18 centavo to 143.87 centavos per peso.

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