Emerging government debt prices eased in light trade on Friday as investors adjusted their positions ahead of the weekend. Brazil's global bond due 2040, considered the emerging market benchmark paper, eased 0.125 to bid 129.563 and to yield 6.593 percent.
"As far as the emerging debt market is concerned prices are coming off a little bit. I wouldn't ready anything into it. It is just position accommodation before the weekend. You don't want to be caught overpositioned," said Enrique Alvarez, Latin America debt strategist at IDEAglobal.
"There is not a lot of liquidity, and the market has plateaued at a very good level." Overall bond spreads over US Treasuries tightened 5 basis points to 181 points on the J.P. Morgan Emerging Markets Bond Index Plus (EMBI+). Total returns were 0.07 percent higher.
Analysts said a stronger-than-expected US retail sales data for July revived speculation among investors the Federal Reserve could resume raising interest rates.
"Retail sales were a little higher than expected and it goes contrary to the Fed expectations of a cool-off of the economy which is supposed to lead us lower as far as inflation expectation," Alvarez said. "So you have a minor piece of data but it is off-sync to what the Fed was expecting." US July headline retail sales rose 1.4 percent, above economists' forecasts for a rise of 0.8 percent.
Mexico on Thursday sold $12.4 billion worth of peso bonds, with the intention of taking advantage of foreign reserves boosted by record oil exports to prepay $9 billion of dollar debt with international lenders.
In all, the debt payback will reduce federal foreign debt to around $50 billion, or 28.5 percent of total debt from 32.5 percent previously. Mexico also stands to save more than $50 million in interest payments.
"Thus, while we see limited overall impact from the announcement, having less senior claims against the bonds is welcomed, and we believe the liability management operation could eventually contribute to improvements in the credit outlook as it has happened in the past," Merrill Lynch bank said in a research note.