Peru Bonds Rise to One-Month High on Stimulus View; Sol GainsJohn Quigley
Peru’s sol-denominated bonds rose, pushing yields to the lowest in a month, on speculation the Federal Reserve will maintain stimulus to shore up the world’s biggest economy, boosting demand for higher-yielding assets.
The yield on the nation’s benchmark 7.84 percent bond due August 2020 fell one basis points, or 0.01 percentage point, to 3.76 percent at 1:50 p.m., according to data compiled by Bloomberg. That’s the lowest since March 5. The price rose 0.04 centimo to 125.81 centimos per sol.
U.S. payrolls grew by 88,000 workers last month, the least in nine months, adding to speculation the economy is slowing. The U.S. central bank has been buying $85 billion of bonds each month since the start of the year in an effort to hold down borrowing costs and encourage economic growth.
“Portfolio managers think the second quarter will be disappointing,” said Diego Alvarez, a bond trader at Banco Internacional del Peru SAA in Lima.
Bank of Japan Governor Haruhiko Kuroda said yesterday the central bank would double its monthly asset purchases in a bid to stoke inflation. European Central Bank President Mario Draghi said the ECB stands ready to cut interest rates and consider additional measures to boost growth.
Japan’s stimulus pledge “has given a good boost to fixed income globally,” Alvarez said.
The sol appreciated 0.1 percent to 2.5820 per U.S. dollar at today’s close, according to prices from Datatec. The central bank bought $40 million of U.S. currency, the most in a week, and said on its website it paid an average 2.5824 soles per dollar.