Mexico and Brazil: Latin America Bond and Currency Preview

Buenos Aires -- The following events and economic reports may influence trading in Latin American local bonds and currencies today. Bond yields and exchange rates are from the previous day’s session.

Mexico: The economy shrank 2.8 percent in the fourth quarter from the year earlier period, after contracting 6.2 percent in the third quarter, according to the median estimate of 11 economists in a Bloomberg survey. The national statistics agency is slated to release its gross domestic product report at 10 a.m. New York time.

The peso advanced 0.5 percent to 12.8148 per dollar.

The yield on Mexico’s 10 percent bond due December 2024 rose two basis points, or 0.02 percentage point, to 7.95 percent, according to Banco Santander SA.

Brazil: President Luiz Inacio Lula da Silva’s Workers Party on Feb. 19 vowed to increase the role of the state in the economy before presidential elections in October. The platform calls for stronger state-controlled companies, a reduction in the work week by four hours, modernizing the military and having more public consultation before laws are passed.

The real climbed 0.3 percent to 1.8027 per dollar.

The yield on the zero-coupon, real-denominated bond due in January 2011 rose five basis points to 10.32 percent, according to Bloomberg prices.

Other prices in Latin American markets:

Argentina: The peso was little changed at 3.8542 per dollar.

The yield on the country’s dollar bonds due in December 2033 dropped 43 basis points to 12.94 percent, according to JPMorgan Chase & Co.

Chile: The peso was little changed at 531.75 per dollar.

The yield for a basket of Chile’s 10-year peso bonds in inflation-linked currency units, called unidades de fomento, slid two basis points to 3.07 percent, according to Bloomberg composite prices.

Colombia: The peso rose 0.5 percent to 1,921.72 per dollar.

The yield on Colombia’s benchmark 11 percent bonds due July 2020 was little changed at 9.11 percent, according to Colombia’s stock exchange.

Peru: The sol was little changed at 2.8515 per dollar.

The yield on Peru’s 8.6 percent bond maturing August 2017 rose one basis point to 5.11 percent, according to Citigroup Inc.’s unit in Lima.