Mexican stocks fall 1.40% and the peso sits 4 centavos from its ceiling

Good morning!

Mexico's index drops on its own

Mexico's IPC fell 1.40% yesterday to 64,514, the sharpest move on the board — roughly a day and a half of its usual range. Abroad, barely a ripple: the S&P slipped 0.71%, ES futures sit flat at +0.04%, and the VIX closed at 16.16, still in the cautious bucket. It reads like a local stumble with no imported risk-off wave behind it.

The ceiling tightens and I stay in the band

The peso opens at 17.0083, up a token 0.06%, which leaves it 4 centavos from the 10-day ceiling, now at 17.0435. Watch the number: that rolling top came down from 17.0669 yesterday, so the range is compressing from above while the floor holds at 16.8781.

After yesterday's crude spike through Hormuz I dropped the pro-peso bias and stepped aside, with 17.07 and a 10Y back over 4.80% as my trigger to flip toward the dollar. Neither printed: the pair never cleared 17.07 and the U.S. yield eased. I hold the neutral call, but with an explicit range thesis (16.88 to 17.07), not as a hiding place from taking a view.

The part that doesn't add up

Here's the uncomfortable bit. The 10Y eased 2bp to 4.78% and crude is backing off (WTI 89.52, -0.78%), so the Hormuz fuse is cooling. With those two tailwinds, and Chicago specs net long the peso by 82,382 contracts (up 2,930 on the week to Aug 25), the currency should be probing its floor rather than drifting toward the top. Climbing while pinned near 17.04 against that backdrop leaves me wondering who's still bidding for dollars.

Toward next week's CPI

The calendar is clear today: INEGI inflation lands on the 9th, the ECB decides on the 10th, U.S. CPI on the 11th. Until then it's flows and global appetite, with the 2s10s curve still positive at 0.41pp and no sign of stress in rates.

The Risk On score eases from 55 to 53 and stays CONSTRUCTIVE: calm-to-cautious vol and the rate carry hold it up, while a soft Bolsa and Bitcoin at 76,697 (-0.91%) drag. As long as the pair respects its band there's no edge in picking a side; the day it clears 17.07 with the U.S. yield back above 4.80%, that's when I lean dollar.

— See you tomorrow for Thursday's view.