Yields on federal government bonds fell amid expectations that the Bank of Mexico (Banxico) could make an aggressive cut in the reference interest rate on Thursday, according to analysts.
“The downward trend in inflation may support the idea of a 50 basis point cut by Banxico, as it has room to lower the rate in line with the Federal Reserve’s expectations and the slowdown in inflation,” said Sergio Escobedo, senior debt market analyst at Signum Research.
The papers with the greatest movement were the 679-day Federal Treasury Certificates (Cetes), which fell 0.63 percent. This instrument presents its biggest drop since January 2023, according to data from Banxico.
At Tuesday’s auction, 28-day Cetes fell by 0.05%, bringing the rate to 10.35 percent. 10 billion pesos were placed.
The central bank issued 91-day Cetes at a rate of 10.47%, which is 9 basis points (bp) less than the previous auction and an amount placed of 15,000 million pesos.
Banxico also placed 16.9 billion pesos in 175-day Cetes, with a decrease of 18 bp in its premium, at a rate of 10.36% compared to the auction of the previous week.
Banxico offered 679-day Cetes at a rate of 9.92%, which is 0.63 percentage points more than the previous offer, with an amount of 17.3 billion pesos.
The government issued Development Bonds (Bondes) in Udis for 336 days at an interest rate of 0.09%, the same level as the previous auction, and an amount placed of 10.2 billion pesos.
The Bank of Mexico placed 5.3 billion pesos in 1,092-day bonds at a rate of 0.21%, 1 bp more than the previous auction.
This Tuesday, the central bank issued 10-year MBonos with a 0.53% decrease to place the premium at 9.21%, with an amount placed of 18,000 million pesos.
According to Gabriela Siller, director of analysis at Banco Base, foreign investors are taking advantage of the last few months of high interest rates in Mexico before the economic outlook and credit rating deteriorate. Demand for government instruments is driving up their price.
At Tuesday’s auction, Banxico placed 9.481 billion pesos in 30-year Udibonds at a premium of 4.85%, 0.18 percentage points below the previous auction.
