Background on Cetes and Banxico
Certificados de la Tesorería de la Federación, or Cetes, are interest-bearing securities issued by the Mexican government to finance its debt. Banco de México (Banxico), the country’s central bank, manages these Cetes. Banxico sets the target rate for these securities, known as the Cetes target rate or reference rate. This rate influences other interest rates in Mexico, affecting loans, mortgages, and savings accounts.
Recent Cetes Subastas
In the latest weekly auction by Banco de México, Cetes performance was mixed as market participants anticipated a rate cut by Banxico. Here are the key details:
- Cetes a 28 days: The interest rate increased by 20 basis points to 7.30%. A total of 7,000 million pesos were placed, with demand being 2.26 times the amount offered—lower than the previous auction.
- Cetes a 91 days: The rate remained unchanged at 7.23%, with 9,700 million pesos issued. The demand was 3.16 times the amount placed, consistent with the last emission.
- Cetes a 175 days: These Cetes were issued at a rate of 7.29%, down by 0.10% from the previous auction. The demand was 3.46 times the amount placed, higher than the last colocation.
- Cetes a 721 days: The rate dropped marginally by 0.01% to 7.77%. The demand was 2.29 times the amount placed.
Market Expectations for Banxico Rate Cut
According to Banxico’s survey of expectations, analysts predict that the Cetes a 28 days rate will close 2025 at approximately 7.05%. The market nearly unanimously expects Banxico to reduce its reference rate by a quarter-point during its policy meeting on Thursday, placing it at 7.25%.
Key Questions and Answers
- What are Cetes? Cetes are interest-bearing securities issued by the Mexican government to finance its debt. They are managed by Banco de México (Banxico), the country’s central bank.
- Why are Cetes important? The Cetes target rate, or reference rate, set by Banxico, influences other interest rates in Mexico. This includes loan rates, mortgage rates, and savings account interest rates.
- What happened in the recent Cetes auction? The auction showed mixed results for different Cetes terms. While some rates increased, others remained stable or decreased slightly. Demand varied for each term, with some experiencing higher demand than others.
- Why is the market anticipating a Banxico rate cut? Market participants expect Banxico to lower its reference rate by a quarter-point on Thursday due to concerns about slowing economic growth and inflation pressures.
