Friday wrap: peso claws back as the market squares up

Los viernes antes de una semana con Fed tienen su propia lógica: nadie quiere llegar al fin de semana demasiado expuesto. Y hoy eso se nota en todos lados — cierre de cortos, volúmenes a la baja, y el peso recuperando de la mano del optimismo cauteloso.

The Data

The data point that gave markets wings today was the Michigan consumer sentiment index (June preliminary): it came in at 69.1, above the 67.4 expected. For a market that has spent two days digesting a hot CPI, this was music to its ears — if the consumer keeps spending, recession fears recede, and the Fed has more room to move slowly. Equities rose modestly and bonds held firm, with the US10Y at 4.49% — the week's upward move is already priced in.

The VIX fell to 17.7 from Thursday's 19.4. Not total calm (that would be 15–16), but a signal that the post-CPI panic peak is behind us.

The Peso

This is the good news of the day: USD/MXN recovered from the highs of 17.39 back to the 17.22 zone, closing practically on support. The move was helped in part by the typical Friday closing of short peso positions, and in part by a slightly softer dollar (DXY 99.80). The next real support sits at 17.17 — if next week's Fed turns out more dovish than expected, that level comes into play.

Index Reading

The index rises to 79 and closes the week at its best level since Monday. That is no small thing considering we started Wednesday with a CPI print that spooked half the market. Next week is Fed — and that is where it gets decided whether this 79 was a ceiling or a springboard.