Local Debt: Steepening A Sign Of Fiscal Frailties?

Mexico's local debt sovereign (MBono) yield curve has seen aggressive compression in recent trading, driven by the very weak growth outlook for the US economy. In Mexico's case this translates into soft economic activity and few (if any) demand-pull inflationary pressures, implying no rate hikes until well into 2012 - which has long been our core view.

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