Cetes Maintain Positive Real Returns Despite Rising Inflation; Market Prices In More Banxico Cuts
Mexican Treasury Certificates (Cetes) remained attractive in the latest government securities auction, offering yields that, for most maturities, more than doubled the annual inflation rate of 3.57% reported in August by the national statistics agency Inegi. In an environment of gradually slowing price growth and expectations of further interest rate cuts by the Bank of Mexico (Banxico) toward late September, short-term instruments continue to stand out as a defensive option to preserve purchasing power.
Cetes are zero-coupon bonds: they are purchased below their face value (10 pesos) and pay the full amount at maturity; the difference is the yield. Available terms are 28, 91, 182, and 364 days. In the latest auction, yields stood at about 7.35% for 28 days (unchanged), 7.59% for 91 days (slight decrease), and close to 7.69% for 182 days. The one-year (364 day) Cete offered a yield near 8.07%, the highest among short-term instruments.
With annual inflation at 3.57%, these yields represent positive real returns. For example, a 28-day Cete at a 7.35% nominal rate would provide a real return of about 3.8% if the annual inflation rate remained steady; however, the final outcome depends on future inflation, the frequency of reinvestment, and applicable taxes on interest earned. For retail savers, it continues to be a low-risk alternative to hedge against loss of purchasing power.
It is important to note that Cetes offer maturities up to 364 days. Yields around 8% for two-year terms correspond to Bonos M (fixed-rate government bonds), not Cetes. The main attraction in the short-term segment is liquidity, low costs, and limited sensitivity to rate movements; in the middle of the curve, the potential to “lock in” a rate for a longer period comes with increased valuation risk if the holder needs to sell before maturity.
The uptick in headline inflation in August occurred within Banxico’s target range (3% ±1), and the market is still pricing in an additional 25-basis-point cut in the policy rate. Even so, the central bank has reiterated a prudent approach due to persistent service-sector inflation and external volatility. Factors such as exchange rate movements, energy prices, and U.S. monetary policy will continue to impact the pace of adjustment.
For conservative investors, a “ladder” strategy in Cetes—combining 28-, 91-, 182-, and 364-day maturities—helps manage reinvestment risk if rates keep trending down. Those seeking to lock in current yields for longer may look to longer terms, accepting greater rate sensitivity. In all cases, it’s crucial to consider tax withholding and practical factors: Cetesdirecto offers commission-free, accessible investing with liquidity at maturity.
On the macro level, Mexico’s economy faces both tailwinds and challenges. Investment linked to nearshoring continues to drive growth, but electric, logistical, and regulatory capacity will be critical to sustaining it. Public finances, Pemex’s performance, and sovereign debt dynamics are all variables that could influence the yield curve. A contained inflation environment and fiscal consolidation would support lower rates; supply shocks or sudden currency depreciations could delay them.
In summary, Cetes remain a competitive vehicle to protect savings from inflation, offering positive real returns and high liquidity. The choice between short or long terms will depend on interest rate expectations and liquidity needs. Closely watching core inflation, Banxico’s decisions, and exchange rate trends will be key to fine-tuning positions in the weeks ahead.
Final note: Currently, the risk-return balance favors short-term government debt. If inflation converges to target and Banxico continues a gradual rate-cutting cycle, yields will trend lower; as such, diversifying maturities and reviewing liquidity objectives can help capture returns without sacrificing flexibility.
