Risk appetite is back: the peso bounces 11 centavos to 18.20 and I flip to pro-peso

Happy Friday! Let's close out the week.

Risk is bid across the board

I'm flipping to pro-peso. Risk appetite came back hard overnight and the peso has recovered 11 centavos from the prior close, from 18.3048 to 18.1974.

This is not just the pair moving on its own: the VIX is down to 15.61, S&P futures are up +0.84% and bitcoin adds +2.17%. When the whole risk complex bids at once, the peso is usually first in line across LatAm.

That said, the bounce is 11 centavos in a single overnight session —more than double its typical daily move— and that deserves confirmation before anyone celebrates.

The Risk On index jumps from 46 to 64 (CONSTRUCTIVE): the VIX, equities and bitcoin carry it, while a crushed rate premium holds it back.

Why I switch sides with my line untouched

Yesterday I stood with the dollar and drew the line at 18.15: I said I'd drop the bias if the pair closed below it. Spot opens at 18.1974, still above that line, so my condition never fired and I'm changing anyway.

The mechanism turned, not the level. Yesterday the stress lived in the bond and the greenback led; today the entire risk complex reversed, and waiting for the exact close would leave me late.

Credit where it's due: the long-dollar call from September 25 just validated —the pair ran +2.59% over five business days and matured today. The dollar paid; now I read the wind the other way.

What bothers me is carry: the Banxico–Fed gap has compressed to 2.62pp, the thinnest cushion in weeks. I'm turning toward the peso with less rate premium than ever, and that's a genuine soft spot.

My view: I lean peso while risk appetite holds; I go back to the dollar if USD/MXN recovers and closes back above 18.30.

Oil caves and the curve exhales

WTI collapses -3.84% to 89.30 and the 10Y eases 7bp to 5.17%. For Mexico, cheap crude cuts both ways (less oil revenue, but also less cost pressure), so I don't read it as a clean tailwind for the peso.

The 20-day peso–10Y correlation sits at -0.06: they're decoupled this month, so the bond's relief isn't what's pushing the currency today. The push is pure risk appetite.

Until Mexico's CPI on the 9th, 18.30 is the line that rules.

— Have a great weekend — see you Monday. ☕