Mexico Bonds Market Update: July 14th, 2011

As it says in this article, "you don't necessarily need the world’s biggest interest rates to attract a lot of capital". It turns out that Brazil, while the obvious choice, isn't the only high-earning carry trade. Peru, Colombia and Mexico are all well worth the while.

Look further north, to Mexico. Low interest rates, hardly any currency appreciation – yet investors have been flooding there much as they have to Brazil (see chart supplied by RBS based on data from the Mexican central bank).

“Mexican 10 year bonds trade at 400 basis points over US Treasuries,” Morden says. “There’s no mark to market gain or forex gain. This is pure carry. It’s a statement of the still abundant global liquidity and the limited access to carry.”

Read the rest of the story to see why these countries are another successful choice for investors.