Mexican Bond Yields Surge Amid Justice Reform Concerns

Long-term Mexican bond yields rose sharply to their highest levels since 2008 due to concerns around a controversial proposed government justice reform. Market volatility increased after President Lopez Obrador's Morena party showed unexpected strength in recent elections, fueling fears of potential political capture of the judiciary.

Long-term Mexican bond yields rose on Wednesday to their highest levels in more than 15 years amid market concerns about a controversial proposed government reform to the justice system.

The 10-year yield, with a maturity date of Nov. 23, 2034, rose 9 basis points from its close on Tuesday, to 10.50%, a level not seen since October 2008. Mexico's 20-year yield, maturing on Nov. 13, 2042, rose 14 basis points, to 10.65%, also its highest level since October 2008.

Mexican markets have seen increased volatility after President Andres Manuel Lopez Obrador's ruling Morena party performed better than expected in an election this month. The party's gains in Congress breathed new life into stalled efforts to pass a slate of constitutional reforms that Lopez Obrador argues are needed to purge the government of corruption.

Critics fear the reforms will fundamentally alter the balance of power in Mexico, facilitating the political capture of the judiciary and removing vital checks and balances.

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