Gold surges 3.96% as peso hugs its floor: spot at 17.21, score 58
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!
Gold out of tune with risk-on: +3.96% in a morning
The session's most atypical move isn't in the peso: it's gold, +3.96% at 4,258, a jump of 2.5x a normal day. The metal flying while the S&P sits at record highs and the VIX at 16.81 is the discordant note.
This isn't panic, though. With crude melting on the possible US-Iran deal and yields easing, bullion is catching cheap hedging flow more than genuine fear. The MOVE ticked up +2.72 pts to 77.56, but from dormant levels.
Risk-on with a life insurance policy. That's how odd the board looks.
The peso hugs its floor, 1 centavo from 17.2030
The super-peso won't yield: USD/MXN trades at 17.21, -0.21%, just 1 centavo from the 10-day floor at 17.2030. We flagged that floor yesterday, and today the pair grazes it again.
The fuel is the same as ever: the 2.87pp Banxico–Fed gap pays to stay long pesos, with realized vol anchored at 6.59%. Chicago speculators carry 72,528 net long contracts —they added 829 on the week—: positioning backs the thesis, it doesn't fight it.
The relevant ceiling stays distant, up at 17.5367.
Soft yields, curve slope intact
The US 10Y eases to 4.62%, and that relief in rates is what props up the peso and gold alike. The curve keeps its shape: the 2s10s at +0.45pp, with no sign of an aggressive bull flattening.
The 20-day correlation between the peso and the Treasury sits at zero: this week the rate premium outweighs the swings in the long bond. The pro-peso view from Jul 10 already matured as a win —the pair fell 0.75% over five days—; the pattern holds.
Banxico sets the tempo and the score at 58
Tomorrow brings the event: consensus to hold at 6.50% after signaling the cycle's close. Headline inflation eased to 3.55%, but the balance of risks still tilts up —any firm tone would reinforce the carry.
View: with the rate premium firm and the pair pinned to 17.2030, the bias favors the peso as long as the 10Y doesn't break 4.80% on a sustained basis and the DXY doesn't reclaim 101; above that I turn neutral. I'll go with the base —mildly pro-peso— propped by the rate-gap catalyst.
Risk On at 58/100, CONSTRUCTIVE: a dormant VIX, a firm peso and a live carry hold it up; the only shadow would be a more dovish Banxico than expected.
— See you tomorrow for Thursday's view.
Index at the time of this note (2026-08-05) — the live value on the homepage may have changed.
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