MBono Liquidity Tracker: liquidity rebounded in 1Q24
- Liquidity in the MBono market, as measured by traded volume, increased in 1Q24 after moderating in 4Q23. Local banks are still the main participants in the MBono market, although foreign investors' activity has increased since the beginning of 2024 after two years of reduced activity. Local pension funds' liquidity also improved in 1Q24 versus the previous quarter, as indicated by trading volume. Overall, liquidity has continued to improve after Banxico initiated an easing cycle in March. Pension funds, foreign investors, and other market participants have increased their activity in higher-duration assets, a trend that may persist in the future. In our view, liquidity could further improve as Banxico continues to gradually cut rates.
Udibono Liquidity Tracker: liquidity also surged in 1Q24 after being low in the previous quarter
- Liquidity in the Udibono market, measured by traded volume, resumed an upward trend. Local banks remain the principal players, followed by local mutual funds and other local investors. Traded volume increased in terms of interbank, foreign investor and other local investor activity. In contrast, liquidity metrics for local pension and mutual funds saw a downtrend.
Swaps trading volume: Liquidity in swaps keeps booming, mostly in IRS
- The positive trend in liquidity continued in 1Q, although the peak was in 2023. Liquidity measured in terms of trading volume is higher than a year ago. Most of the activity was in the IRS market, as participants were actively trading monetary policy expectations. Foreign investors were behind the recent uptrend in average trading volume. Volume will most likely remain high as the market moves to price in the easing cycle. Liquidity by maturity was mostly focused on the 0-1Y section, however, liquidity in the 2Y-4Y area also increased compared to previous years.