The yield on Mexico's 10-year government peso bond fell for the first time in over a week on Friday as investors bet the central bank would keep interest rates steady for several months at least.
The Mexican central bank held interest rates steady earlier on Friday, saying that it saw a growing chance that a slowdown in the US economy would hit economic growth in Mexico. A slowdown would cool inflation in Mexico and take pressure off the central bank to raise rates. The bank raised its benchmark interest rate to 7.50 percent in October as it warned about rising food prices.
"Now they're putting more emphasis on the external environment and the slowdown in the US economy," said Alfredo Thorne, senior economist for Latin America at J.P. Morgan Chase & Co. Thorne and other economists said the central bank would likely keep interest rates unchanged well into 2008.
The yield on the benchmark 10-year peso bond fell 5 basis points to 8.07 percent, while its price jumped 0.294 of a point to bid 99.576. The yield on the benchmark 20-year government peso bond dropped 6 basis points to 8.11 percent.
The peso currency ended about flat at 10.975 per dollar. The benchmark IPC stock index gained 0.67 percent to 28,710.87 points but volume remained below average at 57 million shares with many US investors away for a long weekend that started on Thursday with Thanksgiving.
Average daily trading this year has kept above 100 million shares. Copper miner Grupo Mexico led stock market gains, rising 4.61 percent to 73.47 pesos as three-month copper futures rose 2 percent in London trading. Cement maker Cemex jumped 1.4 percent to 28.26 pesos, while its New York traded shares rose 1.77 percent to $25.91.
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