Cetes 28-Day Yield Rises to 9%

This week, the yields on 28-day Cetes saw an increase, while yields for other terms experienced a slight decline. The 28-day Cetes achieved a yield rate of 9% in a context where it is anticipated that the Bank of Mexico (Banxico) will implement additional cuts of 50 basis points in the coming months.

Last week, members of the Board of Governors indicated that the Mexican economy could be facing a recession, given the downturn in indicators such as employment and economic activity. This outlook led analysts to predict that Banxico could make up to three more cuts of 50 basis points to the benchmark interest rate, which could bring it down to 7.5%, below the previously projected 8.5%. Given that the Mexican economy is expected to perform poorly this year, with GDP growth estimated to be close to 0%, the central bank believes this strategy will help control inflation. With inflation already within the target range, Banxico considers it feasible to reduce the interest rate to a less restrictive level.

What are Cetes yields? During this week, the 28-day Cetes were the only ones to show an increase in their yields, reaching a rate of 9%. In contrast, for three months, Cetes offer yields of 8.66%, and for 183 days, the yield rate is 8.55%. For the 350-day term, yields adjusted to 8.57%.

In summary, the increase in yields for 28-day Cetes can be attractive to investors in a rate-cutting environment. However, it’s important to closely monitor the economy and inflation, as both external and internal factors can impact the profitability of these short-term investments. Diversification remains key to mitigating risks in such a volatile environment.