Cetes Yields Edge Lower at the End of January; Markets Price in More Banxico Cuts, but Cautiously
Mexico’s Federal Treasury Certificates (Cetes) will close out January with slightly lower yields for savers, in line with the market’s view that the rate-cut cycle will continue in Mexico, albeit at a more measured pace. In the year’s fourth government securities auction, the most visible move came at the 28-day tenor, a key benchmark for retail investors and corporate treasuries.
The backdrop is inflation that, while still within the target range, has ticked up: headline inflation came in at 3.77% year over year in the first half of January, according to Inegi figures cited by market participants. This level—still consistent with the price-stability target—reduces the urgency of keeping monetary policy highly restrictive, but it also requires carefully calibrating the pace of easing so as not to reignite pressures, particularly in services.
At the auction, 28-day Cetes fell by 0.05 percentage points to 6.95%, while the 91-day tenor held steady at 7.10%. In the belly of the curve, yields moved little: the roughly six-month instrument was placed near 7.14%. At the two-year point, the yield stood at 7.82%, a level that still offers a meaningful cushion versus observed inflation, though it remains subject to change as the monetary-policy cycle progresses.
For investors, the key isn’t just the nominal rate, but the “real” yield—i.e., after inflation. With annual inflation at 3.77%, a 28-day Cete at 6.95% would imply an approximate spread of 3.18 percentage points before taxes and fees, a useful reference for comparing against traditional bank alternatives. However, real returns can shift if inflation picks up again or if the policy rate adjusts downward faster than expected.
Expectations for a slower pace of cuts reflect a delicate balance: on one hand, disinflation creates room to lower rates; on the other, risks that markets continue to watch remain in play, such as global financial volatility, exchange-rate dynamics, and the economic performance of the United States, Mexico’s main trading partner. In an environment where activity could slow due to rates that are still high relative to historical averages, gradual easing aims to avoid a sharper slowdown without losing the anchor of inflation expectations.
From a strategy standpoint, falling rates typically favor investors who lock in yields for longer if they anticipate additional cuts: longer tenors tend to look more attractive when the market expects lower rates ahead. Even so, short-term Cetes retain advantages for those who prioritize liquidity and flexibility—especially households building an emergency fund or companies with frequent cash needs. Tenor selection, therefore, depends more on time horizon and tolerance for reinvestment risk than on any single “winning” rate.
Looking ahead, Cetes yields will hinge on three variables: the path of inflation (especially core), the tone of the central bank’s communication, and the external environment, where rate moves in advanced economies and episodes of risk aversion can shift premia and demand for peso instruments. If inflation resumes a downward trend and growth continues to cool, the market’s base case points to a gradual decline in yields; if price shocks or sustained currency depreciation emerge, the curve could reprice with greater volatility.
In perspective, January’s close confirms a marginal downward adjustment in Cetes, consistent with a market that sees further monetary easing—but not an aggressive one. For savers, the appeal remains that, for now, several maturities still offer a positive spread over inflation; the challenge will be managing tenor and reinvestment in a setting where yields may keep falling as the easing cycle moves forward.
