Nomura sees risk of Mexican bond sell-off by funds

Nomura analysts said on Wednesday that a sell-off of Mexican peso-denominated bonds could gain pace and that potential US anti-trade policies could drive yields back near levels seen during the global financial crisis. In a client note, Nomura said that data showed foreign funds had been selling Mexican peso bonds since the surprise November 8 election of Donald Trump as US president.
The United States is Mexico's top trading partner; Trump threatened to curtail trade with Mexico during the campaign. So far, local pension funds appear to be picking up longer-dated Mexican peso debt, Nomura said. But since foreigners hold about four times more peso bonds than local pension funds, local buyers may not be able to keep up purchases for long.