iShares MSCI Mexico Capped (EWW)
NYSEArca - NYSEArca Real Time Price. Currency in USD
- Barrons.com•3 hours ago
In an emerging market where real interest rates are high and the currency is undervalued, investors can predict that government bonds will outperform: price higher, yield lower. While it is hard to pinpoint an exchange rate’s equilibrium level, the peso has tended over the long run to mean-revert ... [and] is at its lowest level since 1996 after the tequila crisis. To halt the exchange rate sliding, Mexico's central bank has hiked rates three times since late last year at the expense of output, which contracted -0.2% in 2Q16.
S&P Global lowered its outlook on Mexico credit ratings to negative from stable. On Monday, Moody's Investors Service lowered its outlook on Mexico banks to negative. S&P writes: "We are revising the outlook on the long-term ratings on Mexico to negative from stable to reflect an at least one-in-three possibility of a downgrade over the next 24 months if either the government's debt or interest burden deteriorates beyond our current expectations, raising the vulnerability of Mexico's public finances to adverse shocks.
Moody's lowered the outlook for Mexican bank debt to negative from stable, citing expanding lending in a slow-growth economy and oil-price risk. The yield on Mexico's 10-year bond was flat at 5.8% and the Mexican peso was slightly stronger against the U.S. dollar in recent trading. The iShares MSCI Mexico Capped exchange-traded fund (EWW) was up 0.3%, while the iShares MSCI Emerging Markets ETF (EEM) was up 0.8% and the iShares Latin America 40 ETF (ILF) was up 0.6%.