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NAFTA Negotiations Reset? | Brent Crude Gains as Washington Threatens Tehran

Published July 23, 2018
  • Relations between Washington and Tehran took another turn for the worst after Iranian leader Hassan Rouhani warned the US against threatening the country’s exports. This drew a quick rebuke from President Donald Trump. While market reaction to the increasing tensions has been relatively muted so far, Brent crude was trading 0.9% higher this morning, at 74.50, on the developments.
  • Treasury Secretary Steven Mnuchin spent the weekend at the G-20 summit in Buenos Aires easing fears that a currency war is about to break out while reassuring finance chiefs that the President fully supports Federal Reserve independence. This morning, a foreign-ministry spokesperson in Beijing said China has no desire to devalue the yuan amid trade stresses.
  • The deputy governor of the Bank of England will be giving a speech titled “The History and Future of QE”. As Mr. Broadbent’s speech will be the last by any member of the BoE’s Monetary Policy Committee, barring a last-minute intervention from governor Mark Carney, traders will be especially focused on whether Broadbent will join the three Monetary Policy Committee members who called for a tighter stance.
  • Mexican President-Elect Andres Manuel Lopez Obrador sent US President Donald Trump a letter calling for a swift conclusion to NAFTA negotiations and pledging his wish to reset relations between the two countries. NAFTA talks appear headed in a whole new direction, one that could see the United States strike a quick deal with Mexico first, then turn to Canada with ample leverage.
  • Japan’s debt market saw yields surge on media reports of possible changes to the nation’s ultra-loose monetary policy, spurring the central bank to offer to buy an unlimited amount of bonds. The yield on 10-year government securities soared as much as six basis points to 0.09%, its biggest increase in almost two years.