Crude sinks 6.7% and the peso shrugs: firm 2 centavos from 17.29, score at 58

Happy Monday — let's get the week going!

Crude caves and the peso doesn't flinch

WTI drops 6.71% to 78.99, the morning's most unusual move against its own history (z -1.8). By the textbook, an oil crash hits exporter currencies —and Mexico is one— yet the peso didn't blink.

The reason: the underlying market reads cheap crude as a global disinflationary force, not an immediate fiscal shock. And with Pemex already backstopped by Treasury transfers through 2026, that story isn't driving price today.

The currency taps its floor with the rate gap on its side

USD/MXN trades at 17.3083 (-0.21%), just 2 centavos from the 10-day support at 17.2923. On Friday we flagged it hovering near the 17.31 floor; today it tests it again from the strong side of the range.

The prop is the rate premium: the Banxico–Fed gap holds at 2.87pp and Chicago specs carry 72,528 net long contracts on the peso (COT to Jul 28, +829 on the week). The carry is still the magnet.

Yields ease and the curve keeps its slope

The US 10Y sheds 7bp to 4.67%, the second-sharpest move on the board (z -1.6), consistent with crude cooling inflation expectations. The 2s10s stays at +0.45pp, positively sloped and stress-free.

MOVE ticks up to 83.02 —nothing dramatic— and the 20-day peso↔10Y correlation sits at -0.02: the currency is trading on carry today, not on the bond. The rates board leans its way.

ISM first, Banxico on the horizon

Today's only hard print is US ISM Manufacturing (8:00 CDMX): consensus 54.0 vs 53.3, with Prices Paid seen easing to 70.0. A soft prices read feeds the September Fed-cut bet.

The week delivers: Banxico on Aug 6 (hold expected at 6.50%) and Mexico CPI on Aug 7. My read: as long as 17.29 holds as a floor and the 10Y doesn't spike above 4.75%, the bias favors staying long peso / the carry. It's a market view, barely above a coin flip on the historical base —here the catalyst outweighs the stats. I turn neutral on a firm close below support or if DXY reclaims 100.5.

Risk On climbs to 58/100, CONSTRUCTIVE: VIX at 16, the peso on the strong side and the S&P at highs sustain the appetite. A constructive week, with ISM as the first filter.

— See you tomorrow for Tuesday's view.