Score drops from 68 to 63: carry holds but tomorrow's CPI is the only thing that matters

Happy Monday — let's get the week going!

Score pulls back — structure stays intact

The Risk On Score moves from 68 to 63 — a point correction, not a regime shift. The reading remains CONSTRUCTIVE. The decline reflects a VIX that climbed to 16.50 from last week's 15.84 and a Bitcoin that shed nearly 2%, components that drag the score but don't alter the macro picture. The S&P at 7,575 stays in strength territory, and USD/MXN realized vol at 7.01% tells us the options market isn't pricing dislocation.

The week opens with the market clearly in anticipation mode: S&P futures at -0.39% say it plainly. Nobody wants to build aggressive positions on a Monday before a CPI print.

The peso stays on the right side — for now

We flagged last Thursday that 17.6406 resistance was holding — USD/MXN at 17.47 today confirms that read. The pair is trading comfortably within the 17.3631 support / 17.6406 resistance range, with no immediate catalyst to break it in either direction.

The 2.87pp carry between Banxico (6.50%) and the Fed (3.63%) remains the central argument for the peso. With TIIE28 at 6.76%, the differential is wide enough that carry flows won't abandon the trade without a strong reason — and that reason hasn't materialized yet.

The bias favors the peso as long as the 10Y holds below 4.60% on a sustained basis. A break above that level and I go neutral, with the 17.64 ceiling back in play as a target. That's the line in the sand heading into CPI.

The US curve takes center stage

The 10Y at 4.59% is the most important number today — and the one most likely to move tomorrow. The 2s10s spread at a positive 0.38pp describes an orderly steepening, not panic, but a curve beginning to price in a recovery cycle.

The long end remains heavy: the 30Y at 5.05% signals the market doesn't believe the Fed will cut aggressively in the medium term. That environment of elevated long rates is typically a headwind for carry, but the differential with Mexico still compensates. If tomorrow's CPI runs hot, the 10Y can jump quickly and that balance shifts.

Tomorrow is the event — today, manage the risk

The week's defining moment is US CPI on Tuesday, July 14. A soft or in-line print validates the constructive stance: disinflation continues, the Fed has no urgency to hike, and carry stays alive. A hot print flips the script — dollar bids, differential compresses, and 17.64 comes back into question.

WTI bouncing 4.16% to 74.38 is a net positive for Mexico at the margin — it improves terms of trade and provides an additional cushion for the peso if CPI surprises to the upside.

The Risk On Score at 63/100 CONSTRUCTIVE says the board isn't broken, but it's not in euphoria mode either. The market is asking for patience today and full attention tomorrow.

— See you tomorrow for Tuesday's view.