Brazilian 10-Year Bonds Lure Aberdeen as Inflation Seen Peaking

Aberdeen Asset Management, which manages $11 billion in emerging-markets debt, is buying Brazil’s 10-year domestic bonds as the nation’s annual inflation rate ebbed from a 20-month high.

“Brazil is a country we have been adding,” Brett Diment, the head of emerging-markets debt at Aberdeen, said in an interview in London. “You can get 10-year rates north of 11 percent. Inflation has probably peaked, so we like that.”

Annual inflation as measured by the benchmark IPCA consumer price index slowed to 6.27 percent in July from 6.7 percent in the prior month, the national statistics agency reported yesterday. The central bank’s preferred range is 2.5 percent to 6.5 percent.

Yields on Brazilian notes maturing in 2023 dropped three basis points, or 0.03 percentage point, to 11.15 percent at 3:05 p.m. in Sao Paulo. They climbed to 11.63 percent on June 21, the highest since they first traded in March 2012.

Aberdeen is overweight on the Russian ruble, which has tumbled 7 percent this year against the dollar, one of the worst performances among major emerging-market currencies.

“Our bigger risk positions are actually in onshore rates in Russia,” Diment said. “We think there is a chance they will probably cut rates later this month or in September.”

Russia’s central bank will keep the refinancing rate at 8.25 percent tomorrow, according to the median forecast of 20 economists surveyed by Bloomberg.

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