Funda and political wrap: from Brexit, NAFTA, Italian elections to trade wars

In the seventh round of NAFTA talks, (the US saying there has been a lack of progress, USD/CAD highest levels since June 2017), there have been a number of other developments in a geopolitical sense since trump's tariff on steel and aluminium announcement,1) with Italy's anti-establishment parties making big gains in the election sending Italian bond yields through the roof and, 2), the Brexit saga continues with UK pm may setting out the Brexit vision for a trade deal.

Key headlines (source, RRTS/LiveSquawk/ BBG TV).
US data:

• US Markit Services PMI Feb f: 55.9 (est 55.9; prev 55.9).
• Markit Composite PMI Feb f: 55.8 (prev 55.9).
• US ISM non-manufacturing PMI Feb: 59.5 (est 59.0; prev 59.9).

Brexit:

• Irish pm Varadkar: not ‘frustrated’ by UK's Brexit position.
• Irish pm Varadkar: need ‘detailed proposals’ on Brexit from UK.
• Irish Fin Min Donohoe: transition deal by end of March is possible – BBG TV.
• Irish Fin Min Donohoe: Ireland wants border settled in wider EU/UK deal – BBG TV.
• Irish Fin Min Donohoe: still needs evolution and clarity from the UK on customs.
• UK chancellor Hammond: ‘hard to imagine’ post-Brexit EU trade deal, without access for services, that would be attractive to UK -  RTRS.
• UK chancellor Hammond: funding is to prepare for all outcomes on Brexit.
• UK Chancellor Hammond: Ireland, UK, EU have ‘pragmatic relationship’ on border.
• UK Chancellor Hammond: UK not planning to produce draft legal Brexit withdrawal text before EU leaders' meeting in March -  RTRS.
• UK Chancellor Hammond: ‘not seen any clear evidence’ that Brexit vote is currently imposing a cost on public finances - RTRS.
• UK Chancellor Hammond: ‘quite unlikely’ EU will produce new financial services rules during transition period that UK has not influenced pre-Brexit.
• EU's de Rynck: Brexit transition is only certain at the end of Brexit negotiations.
• Eu Barnier's aide de Rynck: ‘unlikely to be certainty’ on future ties by autumn.
• Reports EU is planning ‘vague trade deal offer’ in blow to UK hopes.
• Uk May: looking at us, Canada border as an example for Irish border.
• Uk May: working on ‘all scenarios’; UK will be leaving EU in March 2019.
• Uk May:  there will be no second referendum on Brexit.
• Uk May:  close to agreement on Brexit transition.
• Uk May:  EU law, ECJ decisions will continue to affect us.
• Uk May:  wants Brexit deal on data that goes beyond adequacy deal.
• Uk May:  no hard border between Northern Ireland and Ireland.

Fed speak:

• Fed’s Quarles: revision proposal for Volcker rule should come ‘relatively soon’.
• Fed’s Quarles: regulators considering ‘material changes’ to streamline ‘Volcker rule’.

Italian elections:

• Italy's Renzi resigns as democratic party leader following election defeat.
• Salvini stakes claim to lead center-right Italian government.
• S&P: outcome of Italian general election has no immediate effect on the sovereign rating.

Whitehouse, trade talks and NAFTA

• USTR's Lighthizer: agreed to include chapter in NAFTA negotiations on energy.
• Canadian For Min Freeland: solid progress made in the seventh round of NAFTA talks - RTRS.
• Canadian For Min Freeland: tariffs on steel will be unacceptable and will take appropriate action if need be.
• S&P: US Pres. Trump’s tariffs are positive for us steel & aluminium producers.
• US Pres. Trump: biggest problem on trade is China.
• Rtrs reporting some WTO members expressed ‘very strong concerns’ about U.S. Plans at meeting – trade officials.
• - Mexico, Canada want to talk about steel tariffs in NAFTA.
• Members include EU, Mexico, Japan, Australia, South Korea, Canada & India;
• - steel tariffs can be addressed for Canada, Mexico if we can make good deal on NAFTA;
• - not expecting trade war.
• US Pres. Trump responds to question on house speaker Ryan’s comments; says he’s not backing down on trade.
• WTO chief Azevedo to WTO members: clear we now see a much higher, real risk of triggering an escalation of trade barriers across the globe.
• US aide: house speaker Ryan is ‘extremely worried’ about trade war;
• -          Ryan urges White House to not advance on tariff plan.
• Mexican Econ-Min: Mexico should be excluded from us steel, aluminium tariffs - RTRS;
• - tariffs are ‘the wrong way to incentivize the creation of a new and modern NAFTA’.
• White House spokesman: US Pres. Trump is ‘very confident’ us could win trade war, ‘but that's not the goal’ - RTRS.