MEXICO CITY, Dec 28 (Reuters) - The yield on Mexico's benchmark one-month Cetes was expected to edge lower at Tuesday's auction as Mexico's central bank was seen holding rates steady throughout next year after a tame inflation report.
Traders also say yields could fall after the market soaked up a bigger offer than normal last week when the central bank held a special auction on Dec. 22 aimed at soaking up liquidity ahead of government debt payments.
The yield on the 28-day Cetes, or T-bills, was seen at 4.35 percent, 3 basis points lower than the last regular auction on Dec. 21, according to the average forecast of 10 dealers surveyed by Reuters.
Many economists expect Mexico's central bank to keep its benchmark interest rate at 4.5 percent through 2011 to support a weak recovery from recession. A report last week showing weak inflation in early December supported that view. [ID:nN23131124]
Yields on longer-term Cetes were expected to fall, with the three-month T-bill yield seen 2 basis points lower at 4.59 percent.
The six-month T-bill yield was seen dropping 9 basis points to 4.72 percent.
Mexico's 20-year bond yield was seen at 7.73 percent, up 44 basis points from its previous auction on Nov. 16.
TERM PREVIOUS THIS WEEK'S EXPECTED
RATE (DEC 21) SURVEY CHANGE
(pct) (pct) 28-DAY 4.38 28-DAY 4.35 - 3 bps 91-DAY 4.61 91-DAY 4.59 - 2 bps 175-DAY 4.81 182-DAY 4.72 - 9 bps (Reporting by Lorena Segura; Editing by Leslie Adler)