Background on Certificados de la Tesorería de la Federación (Cetes)
The Certificados de la Tesorería de la Federación (Cetes) are short-term Mexican government bonds issued by the Mexican Treasury to raise funds in the domestic market. These securities are considered a safe investment option for individuals and institutions, as they are backed by the Mexican government. Banco de México (Mexico’s central bank) sets the interest rates for Cetes, which influence short-term interest rates in Mexico.
Recent Cetes Performance
According to the latest auction results from Banco de México, the 28-day Cetes yield has dropped for the second consecutive week, reaching a three-year low of 7.10%. This represents a decrease of 30 basis points from the previous week, and the amount placed was 7,000 million pesos, with demand being 3.07 times the offered amount.
Yearly Trends
So far this year, the 28-day Cetes yield has decreased by 264 basis points, aligning with the downward cycle of the reference rate set by the central bank. This trend indicates a continuous effort to stimulate economic growth through lower borrowing costs.
Upcoming Monetary Policy Meeting
The next meeting of Banco de México’s Junta de Gobierno is scheduled for November 6th, where another 25 basis points cut to the interest rate is anticipated. This move aims to support economic activity amidst global uncertainties and moderate inflation.
Performance of Other Cetes Terms
Alongside the 28-day Cetes, other terms also experienced a decline in yields:
- 91-Day Cetes: 7,000 million pesos were placed at a yield of 7.30%, down 0.05 basis points from the previous issuance. The demand was 4.67 times the amount offered, indicating strong interest from investors.
- 175-Day Cetes: 12,000 million pesos were issued at a yield of 7.41%, a decrease of 0.08 basis points from the previous auction. The demand was 3.34 times the amount placed, higher than the last issuance.
- 679-Day Cetes: 15,000 million pesos were issued at a yield of 7.76%, down 0.09 basis points from the last issuance. The demand was 2.59 times the amount placed.
Key Questions and Answers
- What are Cetes? Cetes, or Certificados de la Tesorería de la Federación, are short-term government bonds issued by the Mexican Treasury to raise funds in the domestic market.
- Why are Cetes yields important? Cetes yields influence short-term interest rates in Mexico and are a key indicator of the country’s monetary policy direction set by Banco de México.
- What is the significance of the recent Cetes yield drop? The decrease in Cetes yields reflects Banco de México’s efforts to stimulate economic growth by lowering borrowing costs amid global uncertainties and moderate inflation.
- What are the other Cetes terms that experienced a yield drop? Along with the 28-day Cetes, the 91-day, 175-day, and 679-day Cetes also saw yield decreases, indicating strong investor interest in these short-term government bonds.
