Oil slides, peso holds at 17.46: score eases to 51 into the FOMC
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.
Good morning!
Oil doubles down and the peso arrives firm on a waiting day
WTI drops another 1.80% to 81.12, extending the decompression that began yesterday with the reported pause on the US–Iran front. Less geopolitical premium in energy is direct oxygen for EM currencies.
With no US hard data at 6:30 CDMX, there's no homegrown catalyst today: the market trades defensively with one eye on tomorrow's FOMC. A day for positioning, not conviction.
17.46: the rate premium keeps the peso in front
USD/MXN prints at 17.4612 (+0.13%), all but pinned where we left it yesterday. The Banxico–Fed gap at 2.87pp still pays you to sit in pesos, and with a lukewarm DXY at 101.57 the greenback lacks the muscle to push.
Yesterday we flagged the 17.3612 floor as the peso's target; today that level remains the downside reference as long as the currency keeps its traction.
Market view: with crude easing and the carry intact, the bias favors the peso while the rate differential stays on its side. I turn neutral if the 10Y reclaims 4.70% on a sustained basis or the pair closes above 17.5531. This is a read, not an instruction.
The curve steepens: front anchored, long end gives
The 10Y eases to 4.63% (-0.24%) tracking the crude relief, while the front barely budges: the 2Y at 4.33% and the 1M–3M anchored between 3.80% and 3.96%.
The 2s10s spread at 0.36pp keeps the slope positive and steepens a touch: the market prices no move tomorrow but an open door further out. Controlled bull steepening, no alarms in the MOVE (77.21).
Tomorrow the script is the debate, not the rate
Wednesday's FOMC arrives with ~65% odds of no change, so the focus isn't the number but the tone and possible dissents toward a hike. With no forward guidance expected, any hawkish signal would move the needle.
Behind it come PCE and the BoE on the 30th, the BoJ on the 31st, then in August Banxico (6th) plus Mexico CPI and NFP (7th). A loaded week; today is the calm before the noise.
The Risk On score slips from 57 to 51, still in CONSTRUCTIVE territory: oil and the DXY add, but the market trims appetite ahead of the Fed. The peso shows up well positioned, though Powell writes the script tomorrow.
— See you tomorrow for Wednesday's view.
Index at the time of this note (2026-07-28) — the live value on the homepage may have changed.
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