Background on Certificados de la Tesorería de la Federación (Cetes)
Certificados de la Tesorería de la Federación (Cetes) are short-term Mexican government bonds issued by the National Treasury to raise funds in the domestic market. These instruments are considered low-risk investments and serve as a benchmark for interest rates in Mexico. Banco de México, the country’s central bank, oversees their issuance.
Recent Trends in Cetes Yields
According to Banco de México, yields on Cetes have been declining for the third consecutive week. This trend is closely watched by investors and economists, as it reflects expectations regarding the Mexican central bank’s monetary policy stance.
Subasta Weekly and Fed Policy Announcement
The weekly auction took place a day before the anticipated policy announcement from the US Federal Reserve. Market participants expect the Fed to maintain its benchmark interest rate unchanged, following recent signals from Fed officials.
Cetes Yields by Maturity
- 28-day Cetes: The 28-day Cetes yield fell to its lowest level since June 2022, at 7.48%, down by 0.17 percentage points from the previous issuance. Demand was 3.62 times the amount offered, up from 3.48 in the previous auction.
- 91-day Cetes: The 91-day Cetes yield decreased to 7.92%, a reduction of 0.03 percentage points from the previous issuance. Demand was 4.67 times the amount offered, up from 3.72 in the previous auction.
- 175-day Cetes: The 175-day Cetes yield dropped by 0.06 percentage points to 8%. Demand was 2.61 times the amount offered, down from 2.79 in the previous auction.
- 707-day Cetes: The 707-day Cetes yield fell by 0.13 percentage points to 8.52%. Demand was 2.94 times the amount offered, up from 2.79 in the previous auction.
- MBonos (3-year bonds): The government issued 16,500 million pesos in MBonos with a 3-year maturity (vesting in March 2028) at an 8.40% yield, up by 0.02 percentage points from the previous issuance. Demand was 2.84 times the amount offered, higher than in the last auction.
- Udibonos (30-year bonds): 9,802.29 million pesos in Udibonos were issued with a 30-year maturity (vesting in October 2054) at a 4.90% yield, down by 9 percentage points from the previous issuance. Demand was 1.80 times the amount offered.
- Bondes F: The government placed 11,950 million pesos in Bondes F. Of this total, 5,500 million were issued for a 364-day term with an oversubscription rate of 0.07%, which remained 0.01 percentage points above the previous auction’s oversubscription rate. Demand was 6.76 times the amount offered.
Key Questions and Answers
- What are Certificados de la Tesorería de la Federación (Cetes)? Cetes are short-term government bonds issued by the Mexican National Treasury to raise funds in the domestic market. They are considered low-risk investments and serve as a benchmark for interest rates in Mexico.
- Why are Cetes yields declining? The recent drop in Cetes yields reflects market expectations regarding the Mexican central bank’s monetary policy stance, particularly in light of the anticipated unchanged benchmark interest rate from the US Federal Reserve.
- What are MBonos and Udibonos? MBonos are 3-year bonds issued by the Mexican government, while Udibonos are 30-year bonds. Both are part of the broader range of Mexican government securities.
- What is the significance of Bondes F? Bondes F are long-term government bonds issued by the Mexican government, with terms typically ranging from 1 to 7 years. They are used by the government to finance public investments and manage its debt.
