MEXICO: Banxico Rate Decision, Industrial Output Close To Estimates

Aug-11 11:05

In line with broad US dollar weakness following yesterday’s data, USDMXN has continued to trade with a heavy tone. Firmer equity indices have bolstered the Peso strength which saw USDMXN print fresh recent lows of 19.9134 late on Wednesday.
- Technically the pair has cleared support at 20.2080, the Jul 29 low suggesting an initial move to 19.8193 next, the Jun 27 low. Key short-term resistance has been defined at 20.8335, the Aug 3 high. Initial resistance is at 20.5004, the Aug 4 high.
Data just released:
- June Industrial Production rises 0.1% m/m; est. -0.1% (BBG)
- June Industrial Production rises 3.8% y/y; est. +3.9% (BBG)
- June Mfg Production rises 5.1% y/y; est. +5.0% (BBG)
The central bank board is unanimously expected to raise the overnight target rate by 75bps from 7.75 to 8.50% at the August meeting.
Ongoing pressures to headline and core inflation, rising inflation expectations and the Fed’s most recent monetary policy action all warrant a continuation of the aggressive pace of tightening.
Focus will be on any signals within the statement regarding the depth of the current cycle and whether a hike of the same magnitude can be expected in September.
- Link to view the full MNI preview with analyst views: https://marketnews.com/mni-banxico-preview-august-2022-keeping-pace-with-the-fed

Want to read more?

Find more articles and bullets on these widgets:

Jul-12 11:02

European government bonds have rallied sharply this morning while equities push lower, marking a continuation of yesterday's broadly risk-off move.

The combination of rising recessionary risks on the back of more aggressive monetary tightening and concerns over a fresh wave of Covid infections have underpinned the latest bout of risk aversion.
Gilts rallied from the open with yields down 13-15bp on the day.
Former Chancellor of the Exchequer Rishi Sunak has won backing from former cabinet ministers Dominic Raab and Grant Shapps in his bid to replace the outgoing UK prime minister.
The bund curve has bull flattened. Cash yields are down 8-14bp while the 2s30s spread has narrowed 6bp.
It is a similar story for OATs where the curve is 5bp flatter on the back of the long end outperforming.
BTPs have firmed with yields 5-12bp lower on the day,.
Supply this morning came from the UK (Gilt, GBP2.75bn) Germany (Schatz, EUR4.513bn allotted) Italy (BTOs, EUR7bn), Spain (Letras, EUR1.796bn) and Belgium (TCs, EUR3.005bn)

Jul-12 10:50

Continued widening of the Tnote/Bund spread today, by another 5bps so far, and widest since the 23rd of May.
Next upside target will be seen at 183.7bps (23/05/22 high), now trading at 179.6bps.

Chart source: MNI/Bloomberg

Jul-12 10:49

Cash Tsys have seen a sizeable rally already today with the combination of China demand fears on rising Covid cases, both German and European ZEW financial analyst sentiment sliding and a further decline in the US NFIB small business survey in the only data of the day.
The result has been the largest inversion in 2s10s inversion since 2007 at -8bps whilst the 3M to 10Y spread continues its slide, touching 74bp having been 120bp just at the start of July and 176bp at the start of June.
2YY -5.8bps at 3.014%, 5YY -6.8bps at 2.987%, 10YY -6.8bps at 2.924% and 30YY -5.0bps at 3.124%.
TYU2 trades 16 ticks higher at 118-28 off an earlier high of 119-03 on solidly above average volumes. It stopped just show of resistance at 119-05 (Jul 7 high), clearance of which could open the bull trigger at 120-16+ (Jul 6 high).
Fedspeak: Barkin (’24 voter) to discuss his speech on The Recession Question from Jun 21 with Q&A.
Bond issuance: US Tsy $33B 10Y Note auction re-open (91282CEP2) – 1300ET
Bill issuance: US Tsy $34B 52W bill auction – 1130ET

UST 2Y, and 10Y yields top panel, 2s10s and 3M to 10Y spreads bottom panel (showing last price and not ask price in text)Source: Bloomberg

MNI US Credit Weekly

Mar-27 20:13

MNI US Macro Weekly: Weighing The Costs Of Conflict

Mar-27 19:55

MNI EGB Issuance, Redemption and Cash Flow Matrix – W/C 30 Mar

Mar-27 17:19