Noon FOMC and oil +6%: peso arrives at 17.48 with score at 48
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!
The noon statement, not the open, defines the day
The opening print is noise: the 12:00 CDMX FOMC is the only event that matters today. Consensus points to holding the range at 3.50%–3.75% for a fifth straight meeting, with CME futures pricing ~64% for a hold and 36% for a hike.
What counts isn't the rate but the script: whether the statement "sets the table" for September. June's dot plot median already put year-end 2026 at 3.8%, so the Fed hasn't shut the door.
As a backdrop, WTI rebounds 6.14% to 84.13, giving back everything it shed this week. That reversal in crude, alongside gold at 4077, revives the sticky-inflation debate right before tomorrow's PCE. Today the Fed talks, the market listens.
17.48: the 2.87-point premium holds through the wait
The peso arrives at 17.4770, barely softer, after we flagged its firmness at 17.46 yesterday. The Banxico–Fed gap remains the anchor: 2.87 points of rate premium that keep Latin American carry attractive.
Positioning backs it up: Chicago speculators are still net long by 71,699 contracts, though they trimmed a touch last week. It isn't euphoria, but there's no rush to dump the peso either.
My read: the bias favors the currency as long as the rate gap doesn't compress. I turn neutral if the Fed hints at a September hike and the 10Y breaks 4.70% on a sustained basis, or if the pair closes above 17.5531. That's a market view, not an instruction.
The curve keeps its slope with the 10Y firm
The 10-year yield climbs to 4.63%, with the long end absorbing the crude tension. The 2s10s slope holds at 0.34pp positive: the front end anchored to the Fed, the long end pricing more inflation premium.
The MOVE at 76.09 signals bonds are jittery ahead of the statement. If the tone reads hawkish, the steepening sharpens and the peso loses part of its cushion.
PCE, tariff deadline and Banxico: the week won't ease up
After the Fed, the script doesn't rest. Tomorrow brings US PCE and the BoE decision; Friday marks the August 1 tariff deadline, where Mexico would land in the minimum 10% band, a relative relief versus rivals.
The Risk On score slips from 51 to 48, DEFENSIVE: VIX at 18.74, carry still useful and a sub-37 peso reading explain the caution. The market won't position before it sees Powell. It all rides on noon.
— See you tomorrow for Thursday's view.
Index at the time of this note (2026-07-29) — the live value on the homepage may have changed.
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