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Last week, we released the 2026 MX Asset Allocation. The report revisits the key themes that shaped markets in 2025 and outlines our strategic positioning across asset classes for the year ahead.
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In our base case, we expect Mexico’s economy to grow around 1%, with inflation peaking slightly above 4% in early 2026 due to tax changes before moderating to 3.8% by year-end. Against this backdrop, we expect Banco de México to continue its easing cycle, gradually reducing the policy rate to a terminal level of 6.5%.
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This environment of stable inflation and soft domestic demand should continue to support fixed-income assets. We remain overweight nominal duration. We also see value in real rates and recommend adding exposure to short-term Udibonos. In contrast, we remain underweight in Cetes and Bondes.
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Our view on Mexican equities remains neutral. Valuations are no longer cheap, and earnings growth is likely to remain modest given the stagnant domestic economy. Our year-end target for the IPC stands at 69,200 points.
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In local credit, we are maintaining an overweight position. Demand remains strong and supply constrained, keeping spreads tight and making decompression unlikely. Within USD assets, we continue to favour Mexican corporate credit over sovereigns.
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On the FX side, we remain cautious. Despite the peso’s strong performance in 2025, we do not expect the currency to firm further but rather to gradually depreciate toward 19.20 by year-end 2026, and recommend taking advantage of the current low-volatility environment to implement hedging strategies, particularly in the first half of the year.
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Regarding local macroeconomic indicators, INEGI released November’s bi-weekly inflation data. In annual terms, inflation rose from 3.50% in the previous fortnight to 3.61%. Additionally, INEGI is set to release September’s investment and private consumption figures on Wednesday (3/12).
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We published several notes last week; for further details please follow the links below.