Over the same period, the Mexican Overnight TIIE Funding Rate (F-TIIE), a key short-term interest rate, has dropped by roughly 300 basis points, from 10.78% to 7.77%. This decrease in borrowing costs is one of the factors fueling investor enthusiasm for equities, which often perform well in a declining-rate environment.
The market expectation for even lower rates is strong, as evidenced by the Three-Month FTIIE futures June 2026 contract. This contract, which reflects expectations for the compounded F-TIIE between June and September 2026, recently settled at 93.2250. This price suggests the market anticipates a future rate of 6.775% (calculated as 100 – 93.2250), an even lower figure than today’s rate.
In addition to declining overnight funding rates, several macro factors are in favor of the Mexican equity market, leading to the rise in bullish sentiment. Explore the macro tailwinds in an earlier research paper. Since the spring of 2025, the weakening of the U.S. dollar (USD) relative to the Mexican peso means dollar-denominated returns are higher for international investors. As the second largest economy in Latin America and one of the best performing emerging markets, Mexico is benefiting from investors looking for diversification and repositioning of equity allocations into emerging markets.