Traders Clamor for Protection as Mexico Inflation Pressure Grows
- Five-year breakeven inflation topped 4.8%, highest since 2015
- Latest CPI data shows worsening dynamic, adds to upside risks
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Increasing skepticism over Mexico’s ability to keep a firm lid on price pressures over the next few years is boosting the appeal of the nation’s inflation-protected assets.
Five-year breakevens, a measure of inflation expectations based on index-linked bonds, surged to the highest since 2015 on Thursday, even after the central bank, known as Banxico, hiked interest rates twice this year. The breakevens price in inflation of nearly 4.8% in five years time, above Bank of Mexico’s 2-4% target range.