During last week, SOFR basis moved downwards on dwindling appetite for hedging MXN positions and easing policy rates implied in the MXN forward curve. The MXN continued to outperform its peers as its carry is among the highest in the EM universe considering current volatility levels. In terms of local and USD curves, slopes will probably continue flat or inverted in the coming months as ongoing uncertainty regarding the future path of monetary conditions still weighs on the short end while risks related to an economic downturn are anchoring the belly. MBono/UMS spreads continued to decrease as MBonos have outperformed UMSs. At the short end of the curve (3Y-5Y), however, spreads remained at high levels. UMS/UST spreads have increased recently, as USTs are outperforming UMSs. Notably, the slope of the UMS curve remains high, which contrasts to the recent flattening of both the MBono and UST curves. In our view, the short end of the UMS curve has scope for moving upwards. Risk premiums are increasing from lows as uncertainty regarding monetary conditions in the US is weighing on EM markets. UMS asset swap spreads against the MBono have decreased recently as the SOFR basis adjusted to the downside. Levels remained tight at the short end of the curve (3Y-5Y) but UMS asset swaps levels continue to be more attractive at longer tenors than local rates. Spreads adjusted to the downside, as expectations of tighter monetary conditions have eased recently because of recession risks, but volatility will probably remain in place.