Late on Tuesday night, in a move which we said could be related to Trump-related tumult, Politico reported that the Trump administration is planning to announce Thursday that it has reached a breakthrough in NAFTA talks with Mexico.
Citing three unidentified people close to the talks, Politico said that this “handshake” deal announcement on Thursday, would clear the way for Canada to rejoin negotiations to revise the free trade pact. The news promptly sent the loonie and peso higher.
However, shortly after the announcement, both Mexico and Canada pushed back against the report, and on Wednesday morning, a spokesperson for the US Trade Representative confirmed that “there is no deal yet” as “major Nafta issues remain outstanding.”
Predictably, the latest denial hit both the MXN and CAD lower…
… while US 10Y futures jumped to highs, rising as high as 120-22+, sending yields to session lows of 2.812%, the lowest level since July 6, and slammed the yield curve even flatter, pushing the 2s10s curve to 21bps, the flattest level all the was back to August 2007.