USD/MXN: Substantial move lower in 10-year US Treasury yields to occur in tandem with Peso strength – Rabobank
Recent price action has seen MXN’s status as the second-best performer year-to-date flip to the worst performer since the beginning of September and the second worst in October. Economists at Rabobank analyze Peso’s outlook.
USD/MXN to trade down to 17.20 if the 10-year does move down to 4.45%
The rise in 10-year yields weighed on risk assets across the board and while there is risk of another beyond the 5% handle in 10-year Treasury yields, we expect a substantial move lower over the coming months with an end of year forecast of 4.45%. Should that come to fruition, then MXN strength is likely to occur in tandem.
If the 10-year UST yield remains at current levels, then our short-term MXN model points to a year-end rate of around 17.60. But if the 10-year does move down to 4.45% then we expect USD/MXN to trade down to 17.20.
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