Mexico's IPC sinks 1.41% but the peso shrugs: 16.9979, 2 centavos from its floor, score 58

Happy Friday! Let's close out the week.

Mexico's stock market bleeds 1.41% while the peso doesn't flinch

The IPC drops 1.41% to 64,826, its sharpest stumble in three months (z -1.5). But this is a local-equity story —profit-taking after the rally—, not a currency problem.

The proof is in the exchange rate: as stocks give ground, the peso firms. Gold adds +1.60% to 4,433 and global appetite is still standing, so the red on the equity board isn't spilling into FX.

Healthy divergence, not a stress signal.

The peso pierces yesterday's floor and flirts with 16.98

USD/MXN trades at 16.9979 (-0.16%), now 2 centavos from its 10-day support (16.9765). Yesterday we flagged the floor at 17.01; today the currency left it behind.

The anchor is the rate premium: 2.87pp between Banxico (6.50%) and a Fed at 3.63%. With the pair's realized vol at just 5.63%, staying on the carry side costs little in nerves.

Positioning backs it up: Chicago speculators are net long the peso by 76,543 contracts and added over the past week. Nobody's fighting the differential.

The Fed loses its urge to hike and the curve keeps its slope

This week's soft PPI and CPI deflated the hike scare: the odds of an increase fell from ~55% to under 35% on FedWatch, with the 2-year at lows since mid-July.

The 10-year Treasury eases to 4.63% and the curve keeps a positive slope —2s10s at 0.48pp—. No inversion, no sign of imminent recession.

Less pressure from U.S. rates is a tailwind for the Mexican premium.

A data-free Friday: calm sets the pace

There are no high-impact prints today in Mexico or the U.S. The MOVE ticks up to 69.23 (+2.72), a reminder that bond vol isn't dead, but the VIX at 14.52 says no one's running.

My call: the bias favors the peso as long as 16.98 support holds and the Banxico–Fed gap doesn't compress. I'm siding with the catalyst —carry, positioning and a more dovish Fed— over a statistical base that today barely beats a coin flip, and I'll say so plainly. If the pair recovers and holds above 17.15 with the MOVE breaking 80, I turn neutral.

Risk On slips from 61 to 58/100, CONSTRUCTIVE: still on the risk side, just one notch less comfortable.

— Have a great weekend — see you Monday. ☕