Peru Bond Yields Fall as U.S. Economic Data Boosts Risk Appetite

Peruvian government bonds rose, pushing down yields the most in a week, as new-home construction in the U.S. jumped more than forecast, fueling demand for higher-yielding, emerging-market assets.

The yield on the nation’s sol bond due February 2042 fell three basis points, or 0.03 percentage point, to 5.06 percent at 2:49 p.m. in Lima, according to data compiled by Bloomberg. The price advanced 0.59 centimo to 126.72 centimos per sol.

U.S. housing starts climbed 7 percent to a 1.04 million annual rate, the most since June 2008 and exceeding the 930,000 median estimate of analysts surveyed by Bloomberg. Demand for the 2042 bonds from foreigners outweighed the prospect of increased supply after the government announced an auction for tomorrow, said Diego Alvarez, a trader at Banco Internacional del Peru SAA.

“There’s a lot of demand for assets offering a higher yield after the rally” in U.S. Treasuries, Alvarez said by phone from Lima.

The yield on benchmark U.S. 10-year notes fell to a four-month low of 1.68 percent yesterday. Yields rose four basis points to 1.72 percent today.

Peru will offer as much as 300 million soles of the 2042 notes tomorrow and as much as 500 million soles in 2023 bonds, the Finance Ministry said in an e-mailed statement today.

The sol appreciated 0.1 percent to 2.5880 per U.S. dollar at the close, according to prices from Datatec. The central bank bought $100 million in U.S. currency today, according to its website.

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