MEXICO: MXN Consolidating Recent Strength Pre-Banxico, Citi Economist Survey Due
Dec-17 11:54
- Broadly, the US dollar trades with a much more constructive tone on Wednesday, prompting the Bloomberg dollar index to operate around 0.5% above the post-NFP lows. Despite this, USDMXN remains unfazed as it continues to consolidate its recent break lower, remaining back below the 18.00 handle and within close proximity to cycle lows.
- Price action comes amid the well covered hawkish repricing in Mexico amid the upward pressure on core inflation. This dynamic has provided an interesting backdrop to this Thursday’s Banxico meeting, where despite the expected 25bp cut, there is a lot of market focus both on the vote split and accompanying guidance within the statement. Our full preview with analyst views for the decision is here: https://mni.marketnews.com/4afutVF
- We also pointed out that the rising political uncertainty in Brazil has prompted an impressive move lower for BRL/MXN in recent sessions. The cross gained further downside traction below 3.30 yesterday, falling to the lowest level since December 2024. This signals scope for a move towards 3.2290, the December lows, while 3.2060 remains a key medium-term support point.
- Citi will release its latest survey of economists today, while President Sheinbaum will participate in her daily press conference. October retail sales is scheduled tomorrow, before the Banxico decision.
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US TSYS: Extending Highs
Nov-17 11:53
- Treasury futures extended the top end of the overnight range in the last 5 minutes, Dec'25 10Y tapped 112-24 before trading back to 112-23 (+6), 10y yield slips to 4.1173% low (-.0310).
- Treasuries last week challenged resistance at the 113-02 level, an area of congestion since Nov 5. This hurdle remains intact, however, a clear move above it would be a bullish signal and shift focus on resistance at 113-18+, the Oct 28 high. A break would also cancel a short-term bearish theme.
- The German 10Y Bund gained as well - but remains off overnight highs, Bbg US$ index firmer at 1217.70 (+1.42), stocks mildly higher (SPX eminis +19.75 at 6,775.00).
STIR: Fed December Pause Seen As ~50/50 Call As Official Data Resumes
Nov-17 11:52
- Fed Funds implied rates are unchanged from Friday’s close, holding last week’s push to a close call for December’s FOMC meeting between another 25bp cut or pausing.
- A pause is now seen as slightly more likely, supported by multiple Fed speakers with patient rhetoric.
- Cumulative cuts from an assumed 3.88% effective: 11bp Dec, 21bp Jan, 31bp Mar, 38.5bp Apr and 53bp Jun.
- SOFR futures are +0.005-0.025, with increases led by 2027 contracts.
- It sees the terminal implied yield remain within recent ranges, at 3.10% (SFRH7) between 3.06-3.16% that has been defined primarily by labor data and a strong ISM services report.
- Today’s data is light – Empire manufacturing for Nov and a delayed construction spending report for Aug – with some Fedspeak updates possibly more important (noted a little earlier). Nonfarm payrolls for September looms large on Thursday even if it is now two months old.
EURIBOR OPTIONS: Risk Reversal
Nov-17 11:50
ERM6 97.8125/98.3125RR, bought the Call for 0.75 in 8k.
