CPI dust settles: bonds holding, peso not quite yet

After yesterday's CPI scare, markets are waking up calmer than many expected — but the peso is not among those celebrating just yet.

The Data

May's PPI came in without surprises (+0.2% month-over-month), giving markets an excuse to breathe. The prevailing read: the hot CPI was real, but not the start of a spiral. U.S. Treasuries confirm it — the US10Y at 4.46% adds only 1 additional basis point, far from the selloff many had anticipated. The fixed income market is holding up, and that is the day's most reassuring signal.

The VIX, however, remains at 19.4 — above its comfort zone (15–16) and still sending the message that calm is fragile. The MOVE at 69 confirms there is no euphoria in bonds either, merely an orderly pause.

The Peso

Here the pressure is real. USD/MXN is floating between 17.35 and 17.42, unable to reclaim the 17.22 support that gave way yesterday with the CPI. The dollar is broadly strong — DXY at 99.69 — and in that environment the peso has few allies. The 17.52 level is the resistance to watch: if the dollar does not relent before the weekend, that level starts coming into play. On the downside, reclaiming 17.22 would be the first sign that the carry trade is breathing again.

Index Reading

The index rises from 73 to 77 — markets digested the CPI better than expected, and that counts for something. But 77 is not party territory: the elevated VIX and a peso under pressure put a clear ceiling on optimism for now. Next week brings the Fed, and until that passes, any rally in the peso has the clock running against it.

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