VIX climbs a second day to 15.74 as US-Canada tariff clock ticks; peso holds at 17.04, score 51

Good morning!

The VIX wakes up again: 15.74 and rising

The fear gauge posts its second up-session, adding 1.49 pts to 15.74, the most atypical move on the entire board today (z +2.0 versus its three-month history). Yesterday we flagged its jump to 15; today it presses on.

This isn't panic —15 is still calm territory— but the tape is paying up for protection. The MOVE keeps pace at 75.63 (+2.72 pts) and gold extends to 4,448: bonds and bullion smell something.

The trigger has a name: tariffs. Preventive hedging, not a stampede.

The peso shrugs off the noise and digs in at 17.0392

With all that background jitter, the currency barely gives ground: USD/MXN at 17.0392 (+0.12%), a whisker from the 16.97 floor it respected yesterday. The FIX printed 17.0245.

The shield is the usual one: a Banxico–Fed gap of 2.87pp that makes betting against the peso expensive. Chicago specs know it —the COT through Aug 11 shows them net long 83,673 contracts, adding another 7,130 on the week.

My take: the bias favors the Mexican unit while the 16.97 base holds and the rate premium doesn't compress. I'm siding with the catalyst —contained dollar, a Fed heading toward cuts— over a historical base that barely clears 54%, and I'll say it plainly. If the cross sustains above 17.15 with MOVE breaking 80, I turn neutral.

The curve keeps its slope with the 10Y at 4.74%

The ten-year rises 4bp to 4.74% and the long end presses, but the 2s10s slope stays positive at 0.51pp. No bull flattening yet.

Watch the decoupling: the 20-day peso↔10Y correlation sits at just +0.18, so a rate pop doesn't automatically drag the exchange rate this month. Carry outweighs the bond.

That cushion is precisely what has let the currency ignore the 10Y's jump.

Tariffs today, PCE next week

The hard event is the clock: the US and Canada negotiate today to avoid 50% tariffs on USD 20bn that start at 12:01 a.m. Wednesday. A breakdown would feed the VIX and test resistance at 17.2662.

On the data front, July Housing Starts whet the appetite ahead of the August 26 PCE, the print that anchors the 85% odds of a September Fed cut.

Risk On slips from 59 to 51/100, still CONSTRUCTIVE: implied volatility weighs, but the peso sub-40 and the carry hold the ground. Constructive, with the guard up.

— See you tomorrow for Wednesday's view.