If it was not for the threat of the incoming US tariffs, Mexico would be one of the most attractive investments in the world, both in bond and currency terms.
In mid-December Mexico cut interest rates for a fourth straight month. Inflation has not picked up, so there may be more cuts to come.
At the same time, the APY on CETES is over 9 percent.
Right now, investors are putting more weight on the impact of potential tariffs. Yes, if tariffs are introduced the currency will come under pressure, high CETES APY or not. But the issue of tariffs will disappear at some time in 2025. They will be announced, accepted, there may be a market reaction, and then things will go on as normal.
Perhaps a Dollar Cost Averaging Strategy over the next three months makes sense.
In the long term, economic fundamentals, like controlled inflation and stable monetary policies, will win out against short-term issues like tariffs.
