Morning Commentary: EM debt steady to higher in light trade; NAFTA renegotiation eyed

By Rebecca Melvin

New York, Aug. 27 – Emerging markets debt was steady in quiet trade early Monday as London’s banks were closed for the summer bank holiday and market players eyed headlines regarding cobbling out trade agreements between Mexico and the United States.

Mexico’s chief trade negotiator Idelfonso Guajardo said that the two sides are working on automotive agreements, one of the toughest sticking points of the renegotiation of the North American Free Trade Agreement.

Meanwhile, in the bond market many summer holdouts who were at their desks most of the summer have taken this week as vacation. Given the light volumes, discerning trends will be difficult, sources said.

Nevertheless, many bonds improved modestly such as Grupo Bimbo SAB de CV’s 4 7/8% notes due 2020, which were up slightly to yield 5.304% with a dollar price of just under par.

In currencies, both the Brazilian real and Turkish lira were a little stronger against the U.S. dollar, with the real posting another day of strength after a downdraft early last week.

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