Cetes Maintain Positive Real Yields After Auction; All Maturities Outpace Inflation
In the most recent government securities auction, Treasury Certificates (Cetes) saw mixed movements but held onto positive real yields compared to inflation. The 28-day note rose 8 basis points to 7.35%, the 91-day note slipped 6 points to 7.62%, the roughly six-month note remained at 7.73%, and the 364-day maturity settled at 8.83%. With annual inflation reported at 3.49% by Inegi, all maturities offer rates that more than double the change in prices, reinforcing their appeal for conservative investors.
Cetes are short-term debt instruments issued by the federal government. They are issued at a discount, and at maturity, investors receive the face value, which is 10 pesos per certificate. They are available in 28-, 91-, roughly 182-, and 364-day terms and can be purchased without commissions through Cetesdirecto or via brokerage houses and banks. Thanks to their liquidity and low credit risk, they are often the entry point to the money market for savers and corporate treasuries.
Demand for Cetes persists in an environment of gradual disinflation and monetary policy that, while already starting to normalize, remains cautious. The combination of contained inflation and relatively high nominal yields creates real interest rate cushions that are attractive for preserving purchasing power. In addition, local demand for government securities—from pension funds, banks, and retail savers—has sustained the short end of the yield curve.
To gauge the “real” return on a Cetes investment, a common reference is to subtract annual inflation from the nominal rate. With the 28-day term at 7.35% and inflation at 3.49%, the ex post real yield would hover around 3.86% annualized, subject to changes as prices fluctuate. It’s important to note that income tax withholding on interest reduces the net return, and future inflation may differ from current levels, affecting the final real outcome.
Selecting a maturity implies different risks. Short-term maturities offer more flexibility to reinvest if rates rise but expose investors to reinvestment risk if rates fall. In contrast, locking in a 12-month yield provides visibility over cash flow, though it sacrifices the chance to capture future rate increases. Investors with defined liquidity needs typically align Cetes’ maturities with their spending commitments.
Even with sovereign backing, Cetes are not free from market considerations. Selling before maturity in the secondary market can result in capital gains or losses depending on the level of rates at the time. For this reason, the usual recommendation is to hold until maturity when seeking yield certainty.
Looking ahead, the trajectory of inflation, communications from Mexico’s central bank, and the Treasury’s placement calendar will be key for the yield curve. Any further cut in policy rates would likely compress Cetes yields, while price pressures from energy shocks, exchange rate movements, or seasonality could erode real returns. Economic performance, public funding needs, and foreign investor appetite will also influence the government’s funding costs.
In summary, Cetes reaffirm their role as a low-risk instrument to shield savings from inflation. Current rates provide positive real yields across all maturities, but their suitability depends on each investor’s time horizon, applicable tax burden, and the path of inflation and monetary policy in the coming months.
