Bond yields rise to highest since november; but the peso slides

Colombia’s bond yields rose to the highest since november as mounting speculation that the Federal Reserve will taper stimulus and faster-than-forecast inflation in the Andean country squelched demand for the securities.

The yield on benchmark peso bonds due 2.024 rose 11 basis points, or 0.11 percentage point, to 6.13 percent at 10:34 a.m. in Bogota, the highest since november 22. 

The price fell 1.13 centavos to 130.560 centavos per peso. 

Yields have jumped 1.01 percentage point in the past month.

Bonds and currencies have tumbled around the world on speculation a pickup in the U.S. economy will prompt the Fed to scale back its asset-purchase program. 

Ten year U.S. Treasury yields have jumped 32 basis points in the past month to 2.10 percent. Colombia’s consumer prices rose 2 percent in the 12 months through may, the government said yesterday, above the median forecast in a survey for a 1.96 percent increase.

“The big driver is speculation over fed stimulus which is leading to this global sell off,” said Camilo Perez, head analyst at Banco de Bogotá SA, the nation’s second-biggest bank. 

“Inflation is providing an additional argument to sell the bonds. 

It’s hard to find buyers in the market, everyone is selling.”

Colombia’s peso dropped 0.5 percent to 1,908.59 per U.S. dollar, the weakest since January 2.012. 

The currency has plunged 7.4 percent this year.