Cetes Yields Fall Despite Banxico Pause; the Inflation “Cushion” Gets Thinner
Yields on Mexico’s Treasury Certificates (Cetes) declined again in the second government securities auction of February, even after the Bank of Mexico recently decided to pause the pace of changes to its policy rate. The move confirms that the bond market is already operating on the assumption that borrowing costs will trend lower in the coming months—and that part of that adjustment is showing up first in short-term instruments.
At the auction, the 28-day Cete came in at 6.88%, the 91-day at 7.00%, and the 182-day around 7.10%. For longer horizons, demand for yield kept rates relatively higher: the two-year instrument was placed near 7.58%. In practical terms, the curve suggests investors are willing to accept lower returns in the short run given expectations of a gradual easing cycle, while requiring an extra premium to lock up their money for longer.
This adjustment comes as headline inflation picked up to 3.79% year over year in January, still within the central bank’s price stability target. However, the forward-looking story is less straightforward: on one hand, disinflation has progressed from the 2022–2023 highs; on the other, pressure points remain in services and in some components that are sensitive to labor-market conditions. In addition, the exchange rate and international energy prices remain important variables for Mexico’s inflation path.
The immediate consequence for savers is that the gap between Cetes’ nominal yield and inflation—the so-called approximate “real yield”—is narrowing. At current levels, a 28-day Cete at 6.88% versus annual inflation of 3.79% implies a spread of about 3 percentage points. That margin is still positive and attractive compared with other low-risk options, but it no longer looks as roomy as it did in recent periods when market rates stayed higher.
For retail investors, the context matters as much as the rate. If the market expects Banxico to cut later on, short-term instruments tend to price that in quickly, and reinvesting each month could mean doing so at progressively lower yields. By contrast, choosing a longer term can help you “lock in” a yield for longer—though at the cost of less flexibility if you need liquidity. In practice, many conservative portfolios stagger maturities (a “ladder”) to balance yield and access to cash.
On the macro side, slightly lower government rates usually ease the public sector’s financing costs and improve conditions for credit, but they also test the peso’s relative appeal versus other markets. If the United States keeps rates higher for longer, the yield differential—one of the supports for flows into peso-denominated assets—could shrink. In that scenario, the performance of the U.S. dollar against the Mexican currency and perceptions of country risk become more decisive for financial stability.
Looking ahead, the main “data point” that will keep moving rates is the path of core inflation and the signal Banxico sends about the timing and pace of potential cuts. Added to this are domestic factors such as the strength of consumption, investment tied to nearshoring, and fiscal management in an environment of greater spending needs. For savers, the key takeaway is that Cetes continue to offer yields above inflation, but the real premium could keep shrinking if monetary policy eases and prices don’t cool at the same speed.
In perspective, the drop in Cetes despite Banxico’s pause reflects expectations of lower rates ahead, keeps real returns still positive, and reopens the debate over which maturity makes the most sense depending on liquidity needs and risk tolerance—with the exchange rate and inflation as key variables to watch.
