Bloomberg News

Mexico Inflation-Linked Yields Hit Eight-Month High; Peso Gains

January 22, 2013

Mexico’s inflation-linked bond yields rose to their highest level since May amid increasing confidence that inflation is under control in Latin America’s second-biggest economy.

Yields on the inflation-linked bonds, known as Udibonos, due in 2014 rose one basis point, or 0.01 percentage point, to 1.353 percent at 8:55 a.m. in Mexico City, according to data compiled by Bloomberg. That would be the highest closing level since May 23. The peso was little changed at 12.6990 per dollar.

Consumer prices probably increased 0.3 percent in the first half of this month, slowing the annual inflation rate to 3.36 percent from 3.57 percent at the end of December, according to the median estimate of 16 analysts surveyed by Bloomberg. The national statistics agency’s bi-weekly inflation report is due Jan. 24.

The report may show a “a good number” indicating slowing inflation, Agustin Villarreal, a fixed-income director at Invex Casa de Bolsa SA, said in a phone interview from Mexico City.

Yields on the government’s peso bonds due 2022 rose four basis points to 5.13 percent today.

Fixed-rate bond yields yesterday touched their lowest levels since July after Mexican policy makers signaled on Jan. 18 that slowing inflation may prompt them to cut benchmark rates for the first time in three years.

To contact the reporter on this story: Ben Bain in Mexico City at bbain2@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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