MNI BRIEF: China Equip't Renewal Policy Includes Foreign Firms

MNI China Daily Summary: Wednesday, July 17

MNI China Press Digest July 17:  Investment, LPR, H2 Priority

MNI: PBOC Net Injects CNY268 Bln Via OMO Wed; Rates Unchanged

CHINA PBOC CONDUCTS CNY270 BILLION VIA 7-DAY REVERSE REPOS WED

MNI: PBOC Sets Yuan Parity Lower At 7.1318 Wed; -1.32% Y/Y

Foreigners Buy CAD20.9B of Canada Securities In May Led By Debt

MNI: US JUN HOUSING STARTS 1.353M; PERMITS 1.446M

MNI: FOREIGN HOLDINGS OF CANADA SECURITIES +20.9B CAD IN MAY

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

MNI BRIEF: Poilievre Calls QE 'Scam' And Would Limit BOC Remit

© 1982-2024 MNI. All rights reserved.
Terms | Privacy
Log Out
Free Trial

Banorte Believe Mbonos Have Limited Further Upside

MEXICO
BulletEM BulletEmerging Market NewsHomepage
  • Given the current outlook and high uncertainty regarding the timing of Fed rate cuts, Banorte believe Mbonos have limited room for further gains. Nevertheless, they believe Mbonos Mar’26 and Sep’26 stand out with relatively cheap valuation when adjusting yield for duration.
  • Despite this, for tactical purposes, Banorte prefer relative value strategies biased towards a steeper curve, as the negative carry and Banxico’s gradual approach result in an unattractive risk/reward to establish receiver positions.
  • In FX, Banorte reiterate their view of buying USDMXN around 16.50. They expect the currency to remain resilient this quarter and to regain more volatility in the second half of the year. The market does not reflect any significant premia ahead of the election, as evidenced by the short-term implied volatility performance.
  • Meanwhile, the attractive carry will remain as a material anchor, benefiting from the market’s more hawkish perception of Banxico and the stabilization (and compression in short-term maturities) of the currency’s volatility structure. Banorte also see shorting EUR/MXN as more attractive, particularly if the pair revisits 18.50, still convinced of an ECB cut next week.
178 words

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
  • Given the current outlook and high uncertainty regarding the timing of Fed rate cuts, Banorte believe Mbonos have limited room for further gains. Nevertheless, they believe Mbonos Mar’26 and Sep’26 stand out with relatively cheap valuation when adjusting yield for duration.
  • Despite this, for tactical purposes, Banorte prefer relative value strategies biased towards a steeper curve, as the negative carry and Banxico’s gradual approach result in an unattractive risk/reward to establish receiver positions.
  • In FX, Banorte reiterate their view of buying USDMXN around 16.50. They expect the currency to remain resilient this quarter and to regain more volatility in the second half of the year. The market does not reflect any significant premia ahead of the election, as evidenced by the short-term implied volatility performance.
  • Meanwhile, the attractive carry will remain as a material anchor, benefiting from the market’s more hawkish perception of Banxico and the stabilization (and compression in short-term maturities) of the currency’s volatility structure. Banorte also see shorting EUR/MXN as more attractive, particularly if the pair revisits 18.50, still convinced of an ECB cut next week.