Mexican Peso: High real yields underpin MXN demand – Rabobank
The post Mexican Peso: High real yields underpin MXN demand – Rabobank appeared on BitcoinEthereumNews.com. Rabobank strategists Christian Lawrence and Molly Schwartz note that despite Moody’s downgrade of Mexico to Baa3, 10-year MBono yields have fallen and markets remain relaxed about Mexico’s investment-grade status. They highlight Mexico’s high real yields, Banxico’s likely hold at 6.50%, fading correlations, subdued USD/MXN volatility, constructive positioning and limited reliance on July seasonals. Carry supports stable peso “Despite Moody’s cutting Mexico to Baa3 (one notch above junk), 10-year MBono yields are 36bp lower than before the downgrade. Markets appear unconcerned about a near-term loss of investment-grade status, with S&P still rating Mexico three notches above junk.” “Mexico continues to benefit from some of the highest real yields globally (>5%), second only to Brazil, supporting demand for MBonos and Cetes. We expect Banxico to remain on hold at 6.50% and the 10-y