Cetes Moderate Rates but Maintain Attractive Real Returns Amid Inflation
The yields on Mexico’s Treasury Certificates (Cetes) edged lower in the latest auction held by the Bank of Mexico (Banxico), yet remain above inflation and continue to offer positive real returns. According to official data, annual headline inflation stood at 3.57% in August, within Banxico’s target range, while Cetes rates are still more than double that level, making them a defensive option for preserving the purchasing power of savings.
In the most recent session, 28-day Cetes were set at 7.25%, 91-day at 7.53%, 175-day at 7.66%, and 364-day at 7.70%. Though there is an ongoing downward trend compared to previous months, the spread over inflation remains substantial, especially in medium-term maturities within the one-year range.
Cetes are discount debt securities issued by the federal government with a face value of 10 pesos. Investors purchase them below face value and receive the total nominal amount at maturity. They are available in short-term maturities (28, 91, 175/182, and 364 days), allowing investors to manage liquidity and stagger maturities. For the general public, the Cetesdirecto platform enables commission-free purchases, while banks and brokerages participate in the secondary market, where daily prices may fluctuate based on supply and demand.
The current appeal lies in the real return. A simple way to estimate it is to subtract current inflation from the instrument’s rate. With annual inflation at 3.57% and a 28-day Cete at 7.25%, the estimated real annualized return is around 3.68%. This figure can differ depending on changes in inflation, the reinvestment rate at each rollover, and the withholding of interest taxes, so the net result for each saver may be lower than the gross yield.
Looking ahead, the trajectory of rates will depend on Banxico’s assessment of inflationary risks and external factors. Market consensus sees scope for gradual cuts in the policy rate—likely in increments of 25 basis points per decision, data permitting—if inflation stays within target and expectations remain anchored. Factors such as the Federal Reserve’s stance, exchange rate volatility, and energy prices may influence the pace of adjustment.
If the rate-cutting cycle continues, short-term yields would tend to moderate, presenting a reinvestment risk for those renewing positions monthly. In contrast, longer maturities may retain a risk premium associated with duration and government debt supply. In this context, strategies like “laddering” (spreading capital across several maturities) help balance liquidity and yield, capturing rates at different points in the cycle.
For small savers, Cetes remain a benchmark compared to bank CDs and high-liquidity savings accounts. Daily liquidity, sovereign backing, and transparent auctions make them a useful instrument for short- and medium-term goals. However, it’s important to keep in mind that if sold before maturity on the secondary market, prices may fluctuate, and interest taxes reduce net yield. Diversifying among Cetes, Bondes F, or inflation-linked instruments can help smooth the impact of price shocks.
In summary, despite the recent downward adjustment in rates, Cetes continue to offer attractive real yields relative to prevailing inflation. Their future performance will depend on price trends and monetary policy decisions, so a gradual and diversified allocation across maturities appears prudent for those looking to preserve value in an environment of rate normalization.
Final note: Today, saving in Cetes offers a balanced combination of security and positive real returns, but with limited reinvestment risk if the rate-cutting cycle continues. Key factors to watch: core inflation, Banxico’s signals, exchange rate movements, and the dynamics of public debt issuance.
