Background on Banco de México (Banxico) and Cetes
Banco de México (Banxico) is the central bank of Mexico, responsible for implementing monetary policy to maintain price stability. One of its primary tools is the Cetes (Certificados de la Tesorería de la Federación), which are interest-bearing securities issued by the Mexican government. Cetes come in various maturities, with the Cete a 28 days being the shortest-term instrument. These securities are crucial for managing short-term liquidity and influencing interest rates in Mexico.
Recent Cetes Auction Results
In the latest weekly auction, most Cetes rates fell, with investors preparing for Banxico’s first policy decision of the year. The Cete a 28 days, the shortest-term instrument, dropped to 6.90% — a decrease of 0.05% from the previous auction. This marks its second consecutive week of decline, reaching levels unseen since May 2020.
- Cete a 28 days: 6.90% (down from 6.95%)
- Amount placed: 5,000 million pesos
- Demand: 3.96 times the amount placed
The Cete a 91 days also decreased by 0.07% to 7.03%, after remaining unchanged in the previous auction. 6,000 million pesos were placed, with demand at 4.40 times the amount offered.
- Cete a 91 days: 7.03% (down from 7.10%)
- Amount placed: 6,000 million pesos
- Demand: 4.40 times the amount placed
The Cete de 182 days saw a marginal increase of 0.01% to 7.15%, with 8,000 million pesos placed and demand at 4.21 times the amount offered.
- Cete de 182 days: 7.15% (up from 7.14%)
- Amount placed: 8,000 million pesos
- Demand: 4.21 times the amount placed
The Cete de 364 days fell by 0.13% to 7.37%. 18,500 million pesos were placed, with demand at 2.48 times the amount offered.
- Cete de 364 days: 7.37% (down from 7.50%)
- Amount placed: 18,500 million pesos
- Demand: 2.48 times the amount placed
In addition, a 30-year MBonos (MBono a 30 años) auction took place, with a maturity date in April 2055 and an interest rate of 9.29%. This was a decrease of 0.23% from the previous emission. The demand was 2.46 times the amount placed.
- MBono a 30 años: 9.29% (down from 9.52%)
- Amount placed: 11,000 million pesos
- Demand: 2.46 times the amount placed
Lastly, Udibonos a 3 years were issued, with a maturity date in August 2029 and an interest rate of 4.01%. This was a decrease of 0.16 percentage points from the previous rate. The amount placed was 7,818.80 million pesos, with demand at 2.12 times the amount offered.
- Udibonos a 3 años: 4.01% (down from 4.17%)
- Amount placed: 7,818.80 million pesos
- Demand: 2.12 times the amount placed
Market Expectations and Future Policy Moves
According to the January expectations survey by Banxico, experts predict that the Cete a 28 days yield will be around 6.57% by year-end and 6.48% by 2027.
Analysts expect Banxico’s Junta de Gobierno to pause the interest rate decline during their meeting on February 5. However, they anticipate a half-percentage point reduction in the reference rate throughout 2026.
The median market expectation for the reference rate by the end of the first quarter in 2026 remains at 7%, according to Monex Casa de Bolsa data.
Key Questions and Answers
- Q: What are Cetes and why are they important?
Cetes are interest-bearing securities issued by the Mexican government, with various maturities. They are crucial for managing short-term liquidity and influencing interest rates in Mexico.
- Q: What happened in the latest Cetes auction?
Most Cetes rates fell in the recent auction, with the Cete a 28 days dropping to 6.90%, its lowest level since May 2020. Other Cetes, such as the Cete a 91 days and Cete de 182 days, also experienced declines.
- Q: What are market expectations for Banxico’s policy decisions?
Analysts predict that Banxico will pause its interest rate decline in the upcoming meeting on February 5, but expect a half-percentage point reduction throughout 2026. The median market expectation for the reference rate by the end of the first quarter in 2026 is 7%.
