Bonds and oil cool, the peso loses 7 centavos anyway, and CPI is the judge

Happy Friday! Let's close out the week.

Yesterday I pinned the dollar to two nails: crude heading for $100 and a 10Y at 5.33%. Both loosened overnight — the Treasury to 5.24% and WTI to 91.05 (-0.48%) — and the peso still shed 7 centavos, from 18.1865 to 18.2544. The script that carried yesterday's open isn't the one running today.

September inflation is the judge, and I don't have it yet

INEGI released Mexico's CPI at 6:00 CDMX. I don't have the confirmed figure on the board, so I'm treating it as the session's pending judge: a hot print underpins the greenback; a downside surprise is the first crack for the peso to fight back toward 18.00.

If you're carrying a short hedge, the thing that moves your day is that INEGI number, not the VIX. And the rate cushion that protected the currency is thinner now: with Banxico at 6.50% and the Fed at 3.88%, the gap sits at 2.62pp, well off the levels that made the peso a comfortable carry.

A 15 VIX and a 100 MOVE: two clocks telling different times

The S&P slipped 0.47% and the VIX still closed at 15.16 — pure complacency in equities. The scare is in another room: MOVE at 100.70 says the strain lives in Treasuries, and that's why the gauge stays DEFENSIVE despite the calm in stocks.

That tension is why Risk On rises from 42 to 49 without leaving the defensive box: Bitcoin (+1.66%) and a positive 2s10s curve pull up, while the peso itself and gold ripping to 4207 drag. Appetite improving without the local currency joining the ride.

I'm staying with the dollar, on a changed thesis

The scorecard first: the Oct 2 pro-peso call validated — USD/MXN moved -0.33% over five business days and matured today. A good mark, but history.

For today I keep the bias toward the buck. Spot opens about 17 centavos below the rolling ceiling at 18.4219, and the window's floor rises from 17.6321 to 17.7053, so the range narrows from below. The uncomfortable part: I'm holding it with crude and the 10Y against me, not because of them like yesterday.

I drop the dollar lean if USD/MXN closes back below 18.00.

— Have a great weekend — see you Monday. ☕