The Impact Of Trade War Uncertainty On Fixed Income Markets
May 7, 2018
• Page 2 of 2
We have a cautious outlook for Mexico, given the country’s upcoming presidential election and the uncertainty surrounding the renegotiation of the North American Free Trade Agreement (NAFTA). While we expect many sections of the agreement, such as rules of origin, to be updated, we also believe a version of the agreement will remain in place. Mexico represents only 10 percent of the U.S. trade deficit, and we believe that the Trump Administration will focus more on the trade deficit with China. Mexican Sovereign bonds offer higher yields than comparable U.S. Treasury debt, but the country will face unchartered territory for the first year or two after the next Presidential election, because the current front-runner is campaigning on a populist platform, which concerns many investors.