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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.