Mexico central bank sells 12-month Cetes; average yield 8.23%

Mexico central bank sells 12-month Cetes; average yield 8.23%

The Mexican central bank, Banco de México, sold 12-month Certificados de la Tesorería (Cetes) on July 2, 2025, with an average yield of 8.23%. This move comes amidst ongoing geopolitical and economic uncertainties, particularly in the Latin American region.

The sale of Cetes, which are short-term debt instruments issued by the Mexican government, reflects the central bank's strategy to manage liquidity and control inflation. The average yield of 8.23% indicates a slight increase from previous auctions, reflecting market expectations of higher interest rates to combat inflationary pressures [1].

The decision to sell Cetes at a higher yield is also influenced by recent developments in the region. For instance, the U.S. President Donald Trump's announcement of a 19% tariff on goods from the Philippines and Indonesia's commitment to cut tariffs to zero on more than 99% of its trade with the United States have created uncertainty in the market. Additionally, the ongoing political turmoil in Brazil, with Bolsonaro's son facing asset seizures, has added to the regional volatility [1].

In this context, the Mexican central bank's action is seen as a prudent move to shore up its financial position and maintain investor confidence. The yield on Cetes is a key indicator of market sentiment and investor expectations for future economic conditions. The slight increase in the yield suggests that investors are anticipating further monetary tightening to address inflationary concerns.

The Mexican peso (USDMXN) inched up 0.2% against the U.S. dollar on July 2, 2025, following the Cetes auction. This minor appreciation can be attributed to the central bank's action, which provided a measure of stability in an otherwise volatile regional economic environment [1].

Overall, the sale of 12-month Cetes at an average yield of 8.23% by the Mexican central bank is a strategic move aimed at managing liquidity, controlling inflation, and maintaining investor confidence amidst regional uncertainties.

References:
[1] Reuters. (2025). US Dollar PHP, USD IDR, USD COP, USD ARS, USD MXN, USD CLP, USD PEN. Retrieved from https://www.tradingview.com/news/reuters.com,2025:newsml_L1N3TJ0QQ:0-latam-fx-stocks-steady-with-focus-on-trade-deals/