📝Expect Solid Demand For Mexican Supply This Week: Banorte IXE

Recent economic data has reinforced expectations for a Fed

rate cut next week. Markets are fully pricing-in a 25bps cut on September 17th, with attention now shifting to the tone of Jerome Powell’s statement for further guidance on the pace of monetary easing. Investors will also be closely watching the updated dot plot and macroeconomic framework. It’s worth noting that market participants continue to debate whether the Fed has room to cut rates by as much as -75bps this year, an adjustment that would exceed the -50bps median reflected in the June dot plot.

Locally, the market has also increased its bets on more aggressive Banxico easing, although it has yet to fully align with our forecast of a year-end policy rate of 7.00% and a terminal rate of 6.50% in 2026.

For next week, we anticipate stable demand for Cetes, supported by their relative attractiveness compared to other emerging market securities. Foreign investors and mutual funds have increased their holdings by 4.0% and 8.3%, respectively, over the past four weeks. Regarding the 10-year Mbono (Feb’36), we expect demand to remain in line with the recent average bid-to-cover ratio of 2.0x across the last four auctions. Similarly, we anticipate moderate interest in the 3-year Udibono (Aug’29), as breakeven inflation for that tenor has stabilized around the 3.30% zone. - Banorte