Fiscal Deterioration Ahead

BMI View: While Mexico's fiscal health is being kept in check for the time being, which is helping local debt yields, we see potential for a significant deterioration in investor perceptions of the fiscal accounts by year-end. Therefore, although we expect local debt yields to continue benefitting from a disinflationary environment over the coming months, our weak take on growth means we do not rule out a sell-off in yields towards year-end or in 2011.

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