- In our 2024 Asset Allocation, we mentioned that Banxico has room to start cutting rates in the 1Q24, and we maintain our view. Nonetheless, the sovereign curves have already moved significantly downwards since the end of last year in anticipation of less restrictive monetary conditions.
- In terms of MBonos, from the belly to the long end, but it has moved in line with our expectations and has already reached our estimates. On the other hand, the short end of the MBono curve has remained more anchored and has not reacted to the probability of near-term cuts. Therefore, we see room to take a tactical advantage in the short end, particularly in the 2Y-3Y section.
- Our positive view towards adding duration remains from a directional perspective as we see scope for further gains all across fixed-income assets in 2024. But, from a tactical short-term perspective, we see value in the front end.
- In terms of real rates, we have been positioned at the long end of the Udibono curve based on our inflation risk balance, coupled with attractive real rate levels. We maintain our view, however, the Udibono curve has also moved downwards, and the long end has reached our expectations and posted attractive returns.
- Therefore, the room to see additional gains in longer Udis seems tighter. As in the case of nominal rates, we see value in the 1Y-3Y section of the Udibonos curve from a tactical short-term perspective, even if inflation continues to moderate.