Score jumps from 59 to 68: markets vote for the peso ahead of US CPI

Happy Friday! Let's close out the week.

The resistance held — and the market made its call

Yesterday we flagged 17.6406 as the line to watch. This morning USD/MXN opens at 17.52, down 0.29%, wrapping the week with the peso in appreciation mode from its highs. The resistance wasn't broken — the market tested it, rejected it, and rotated back into carry. That sequence carries both technical and fundamental weight.

The global backdrop helped: the S&P 500 hit 7,544 (+0.81%) and VIX dropped to 15.84 — genuine risk-on, not a dead-cat bounce. Bitcoin at 64,295 (+1.74%) and ES futures nearly flat (+0.04%) confirm that appetite for risk assets heading into the weekend is intact. That's the engine behind the Risk On Score jumping from 59 to 68.

Carry as anchor, peso as beneficiary

With Banxico at 6.50% and the implied Fed rate at 3.63%, the 2.87pp differential remains the central case for the peso. What shifted this week is that realized vol (7.86%) stayed contained and the MOVE dropped to 68.89 — a vol-adjusted carry that remains among the most attractive in the EM space.

EUR/MXN at 20.01 is also telling: the euro couldn't gain on the peso even with a softer dollar globally, suggesting carry flows aren't leaking out the back door. The 17.3631 support becomes the medium-term target if the environment holds.

The US curve: a steepening that demands attention

The 10Y climbed another 9bps today to 4.54% — same magnitude, same direction as yesterday. A 2s10s spread at +35bps and a 30Y at 5.06% paint a curve that's steepening from the long end, which historically isn't carry-friendly if the move accelerates.

The critical threshold is 4.60% on the 10Y. Below it, carry costs are justified and EM flows persist. If Tuesday's CPI breaks that level to the upside, the picture changes fast. DXY at 100.86 — below 101 — is the other variable: a weekly close below that level reinforces the constructive argument.

What's next: Tuesday's the trigger, today is about consolidation

The high-impact calendar for next week narrows to one event: US CPI on Tuesday, July 14. That print can validate or unwind everything built this week. A hotter-than-expected read reactivates the strong-dollar trade and puts pressure on 17.64; an in-line or soft number consolidates the setup and opens space to test 17.36.

My view: the bias stays in favor of the peso as long as the 10Y doesn't break 4.60% on a sustained basis and the DXY doesn't reclaim 102. If Tuesday's CPI surprises to the upside and both conditions are met, I go neutral and wait for confirmation before taking sides. For now, the Risk On Score at 68/100 — CONSTRUCTIVE provides quantitative backing for that read: no euphoria, but the floor is solid.

— Have a great weekend — see you Monday. ☕