Cetes Maintain Edge Over Inflation and Solidify Their Role as a Low-Risk Safe Haven
Treasury Certificates (Cetes) retained their appeal in the most recent weekly auction, offering yields that remain above annual inflation—a combination that upholds their status as a defensive vehicle for savers and conservative investors in Mexico.
According to primary market results, the 28-day rate settled at 7.40%, ticking down by 7 basis points after a rebound the week before. The 91-day paper dropped to 7.35% (-9 basis points), while the 182-day term posted a slight uptick to 7.49%. The one-year Cetes closed at 7.51%. Sector analysts note that, compared with the end of 2024, the 28-day rate has fallen by over two percentage points, reflecting the anticipated easing process in the short-term curve.
Meanwhile, overall inflation stood at 3.76% year-over-year in September, within the Bank of Mexico’s target range (3% ±1 point). Although the underlying disinflation trend appears slower in services, the current level boosts expectations for a less restrictive monetary stance going into year-end, provided there are no shocks in energy or agricultural prices and no episodes of exchange rate volatility.
Given these levels, Cetes provide a positive real return. For reference, the 28-day paper’s 7.40% yield versus 3.76% annual inflation implies a real return of nearly 3.6 percentage points. This spread can fluctuate with the inflation trend, reinvestment frequency, and the withholding tax on interest (with a reference annual rate of 0.5% for 2024). Therefore, the net result for each individual will depend on their tax situation and investment horizon.
Cetes are discount instruments with a face value of 10 pesos: they are purchased below that value and upon maturity, the full amount is paid out, with the difference representing the gain. As sovereign debt, credit risk is low; however, market risks do exist if sold before maturity and there’s reinvestment risk in a context of falling rates. For small savers, the Cetesdirecto program allows access with small amounts and no traditional intermediaries, broadening the base of retail participants.
The behavior of local yields will continue to focus on three fronts: domestic inflation dynamics, Bank of Mexico’s monetary policy tone, and signals from the U.S. Federal Reserve. An acceleration in prices or a sharp depreciation of the peso could halt or temper any potential rate cuts; on the other hand, if disinflation takes hold and the external environment stabilizes, it is plausible that short-term rates will continue a gradual downward adjustment, compressing real yields in subsequent auctions.
In summary, Cetes continue to offer a cushion against inflation and a low-risk alternative for parking liquidity—even if that benefit may diminish should monetary normalization continue. Investors should consider taxes, their investment horizon, and the possibility of reinvesting at lower rates if financial conditions keep easing.
