"Calderón´s victory spurred overflowing optimism," said Alonso Madero, who manages US$822 million in pension fund assets at Actinver SA in Mexico City. "There´s optimism that the best is yet to come."

Investors expect Calderón, who took office on Dec. 1, will pick up where his predecessor Vicente Fox left off. The Finance Secretariat has estimated the economy will expand 4.7 percent this year, its fastest pace since 2000, as it posts its first budget surplus in a decade.

The yield on the government´s 8 percent peso bond due in December 2015 held at 7.43 percent Friday. The bond´s yield is within 3basis points, or 0.03 percentage point, of a record low of 7.4 percent reached on Dec. 20, according to Grupo Financiero Scotiabank Inverlat SA.

Further gains in Mexican bonds next year may be limited if Calderón is unable to keep his promise to boost investment in Latin America´s second-biggest economy by stepping up spending on infrastructure projects and by fighting crime. Calderón has also said he plans to reduce the country´s income gap by creating jobs for the poor.

"We´re still a developing nation," Madero said. "Domestic problems such as the drug trade and insecurity still make investors want to demand a higher yield for holding Mexican bonds. These aren´t small problems."

Calderón this month deployed thousands of Army troops to arrest drug traders and destroy farms, in a bid to end the drug-related violence that soared during Fox´s six-year term.

The spread, or difference, between the benchmark 10-year bond and a similar maturity U.S. Treasury today fell to a record 2.7383 percentage points. That spread may narrow as much as 40 basis points in 2007, Madero said.

The peso rose 0.5 percent Friday to 10.7987 per dollar. It gained 5 percent in the past six months, the best performance in the second half of the year since Mexico allowed the peso to float against the dollar 12 years ago. The peso declined 1.7 percent in the year.