Mexico Bonds Drop for Ninth Day, Longest Since 2010; Peso Falls

Mexican bonds declined for a ninth day as speculation the Federal Reserve will curtail monetary stimulus overshadowed optimism that the Latin American nation’s government will pass legislation to boost growth.

Yields on benchmark securities maturing in December 2024 rose 12 basis points, or 0.12 percentage point, to 5.32 percent at 4 p.m. in Mexico City, the highest close since Jan. 17, according to data compiled by Bloomberg. The price dropped 1.26 centavos to 140.37 centavos, extending its stretch of daily declines to the longest since November 2010.

“Right now the Fed has more weight,” Roberto Ivan Garcia Castellanos, a bond trader at Casa de Bolsa Finamex SAB in Guadalajara, Mexico, said in a phone interview. “The change of the view of the Fed is more significant now than the reforms.”

Yields fell this month to record lows on speculation President Enrique Pena Nieto would succeed in pushing through legal changes to open up the state-controlled energy to more private investment and to boost tax collection.

The peso slid 0.2 percent to 12.6513 per U.S. dollar, the weakest closing basis since March 7. It has lost 4.1 percent in May, the most among major Latin American currencies after the Brazilian real.

The currency slumped today along with most major-emerging market currencies that have been “beneficiaries” from the liquidity from the Fed’s stimulus program, Rafael Camarena, an economist at Grupo Financiero Santander Mexico SAB, said by telephone from Mexico City. “It’s part of the same effect from uncertainty.”

Before it's here, it's on the Bloomberg Terminal.