Trump's Brazil tariffs hit the peso: USD/MXN jumps to 17.51 and the score drops to 40
The Risk On index sums up global risk appetite — with a Mexico focus — in a single 0–100 number. Depending on where it lands, the day falls into one of these four bands:
The Risk On index is a proprietary indicator, designed and maintained by Mauricio Mercenario. It is a market-reading tool, not investment advice.
Happy Friday! Let's close out the week.
Trump's protectionism reshuffles the session
Today's picture isn't written by rates—it's written by trade geopolitics. Fresh U.S. tariffs on Brazil have lit up risk aversion, and the dollar is a haven once again.
ES futures fall -0.93% and the S&P is coming off yesterday's slide, while the peso pays the price for being an EM risk proxy. When Trump swings the protectionist bat, the peso rarely walks away untouched.
The peso gives ground despite an intact premium
USD/MXN trades at 17.51 (+0.79%), the sharpest jump in several sessions. Yesterday the pair held the low-17.44 area; today it left it behind and points toward the 17.64 ceiling.
The Banxico–Fed differential still sits at 2.87pp, a cushion that in normal conditions shields the currency. But carry doesn't get paid when the market runs to the dollar out of fear: today the rate premium is a bystander.
With June inflation at 3.37%—the lowest since 2020—the peso's fundamentals haven't deteriorated; what changed is global appetite.
The 10Y drops to 4.53% and nobody cheers
Here's the day's anomaly. The 10-year Treasury yield eases to 4.53% (-0.79%), a move that usually relieves EM by compressing dollar funding costs.
But the bid for Treasuries is precisely the symptom of the risk-off, not a pro-peso catalyst. The 2s10s curve stays positive at 0.42pp; with no signs of imminent recession, this is tactical shelter, not a regime shift.
The MOVE at 68 confirms the stress lives in equities and FX, not in rates.
ECB on the horizon and a defensive stance
The local calendar is empty today: the next meaningful catalyst is the ECB decision on July 23. Before that, this morning's U.S. data batch—housing, industrial production and Michigan—can move the needle intraday.
My read: the bias favors the dollar as long as trade tension keeps the ES in the red and USD/MXN above 17.44. A return below that level with equities regaining color brings me back to neutral; a break of 17.64 would confirm more upside for the greenback.
It's a market view, not an instruction: the trigger is the tariff headline, not local fundamentals.
The Risk On score falls from 50 to 40 and enters DEFENSIVE territory, dragged by a weak peso, a red S&P and a risk appetite that today prefers hedges over carry.
— Have a great weekend — see you Monday. ☕
Index at the time of this note (2026-07-17) — the live value on the homepage may have changed.
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