Mexico’s bond yields headed for the biggest five-day drop in five weeks, following Treasuries lower, as mounting concern about Europe’s debt crisis stoked demand for assets seen as a refuge in times of instability.
The country’s local-currency, fixed-rate bonds rose as investors sought safer assets amid speculation that European Central Bank President Mario Draghi may hold off on unveiling full details of a bond-buying plan to help resolve the region’s debt crisis. The correlation of the Mexican debt, known as Mbonos, with Treasuries has increased.
“This is just a maturation of the Mbono market,” Edwin Gutierrez, who helps oversee about $9 billion of emerging-market debt at Aberdeen Asset Management Plc (ADN), said by phone from London. Mexican debt is acting “like a fixed-income market is supposed to be. In risk aversion, bonds rally.”
Yields on peso bonds due in 2024 fell one basis point, or 0.01 percentage point, to 5.51 percent at 1:53 p.m. in Mexico City, according to data compiled by Bloomberg. The price rose 0.08 centavo to 140.07 centavos per peso. Today’s rally pushed the weekly yield decrease to seven basis points, the most on a closing basis since the period ending July 20. The peso declined 0.2 percent to 13.1872 per dollar, extending its drop this week to 0.5 percent.
The 30-day correlation coefficient between 10-year Mexican government bonds and similar-maturity Treasuries today rose to 0.59, the highest level in a year. A reading of 1 means the two securities move in lockstep while -1 indicates they move in opposite directions.
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