Banxico decides today: 34 of 35 see a hold at 6.50% and the peso firms at 17.24, score 56

Good morning!

Banxico takes the mic: a hold at 6.50% is all but signed

At 13:00 CDMX the decision drops, and the consensus leaves little to the imagination: 34 of 35 analysts in the Reuters poll see the rate nailed at 6.50%. Barclays, BofA and Goldman all call a unanimous pause, with services core inflation still uncomfortable.

The number is already priced. The real signal comes from the statement and whether the board leaves the door ajar to further moves. The market will listen to the tone, not the figure.

The peso arrives firm with the rate gap on its side

Spot trades at 17.24 (-0.10%), just 5 centavos from its 10-day floor at 17.1902. The Mexican currency leans on a 2.87pp rate premium over the Fed that today's pause leaves intact: as long as Banxico doesn't touch that gap, funding in pesos keeps paying.

Positioning backs it up. The July 28 COT shows Chicago speculators net long the peso by 72,528 contracts, a constructive base—though a book this heavy also trims the fuel for fresh buying.

The U.S. curve leans on the long end

The 10Y climbs 3bp to 4.64% and MOVE jumps 2.72 points to 73.58: there's some jitter in Treasuries, with Fed officials flagging that more adjustments could still fit. The 2s10s slope stays positive at 0.45pp, no signs of stress.

The nuance matters here: the 20-day correlation between the peso and Treasuries sits at -0.05, essentially nil. Today the Banxico–Fed differential rules over the long bond's swings, not the other way around.

What's ahead: statement today, inflation tomorrow

My read: the bias favors the peso as long as the board ratifies the pause and the 10Y doesn't break 4.70% on a sustained basis. Above that threshold, with the DXY back over 101, I flip to neutral. I'm running with the statistical base—a mild pro-peso prior—and today's catalyst reinforces it.

Mind the asymmetric risk: if Banxico surprises with a dovish cut, the thesis breaks and the 17.19 floor gets tested fast. Tomorrow INEGI's CPI writes the next local chapter.

On the global front, gold extends its run (+1.96%) and crude bounces on a possible Hormuz deal, but neither moves the needle for the peso today.

Risk On lands at 56/100, CONSTRUCTIVE: VIX at 15.97, the S&P near records and peso realized vol at 5.89% sustain the appetite. The score slips a point from yesterday, but the message holds: firm appetite, with Banxico as the afternoon's judge.

— See you tomorrow for Friday's view.