POWER: Germany Proposes Annual Cost-Based Rules to Boost Grid Funding

US President Donald Trump has confirmed in a message on Truth Social that he has paused imposing tariffs on Mexican imports for one month, citing an agreement with Mexican President Claudia Sheinbaum to take steps to secure the US-Mexico border to illicit flows of fentanyl and migrants. 

• Trump: "I just spoke with President Claudia Sheinbaum of Mexico. It was a very friendly conversation wherein she agreed to immediately supply 10,000 Mexican Soldiers on the Border separating Mexico and the United States. These soldiers will be specifically designated to stop the flow of fentanyl, and illegal migrants into our Country. We further agreed to immediately pause the anticipated tariffs for a one month period during which we will have negotiations headed by Secretary of State Marco Rubio, Secretary of Treasury Scott Bessent, and Secretary of Commerce Howard Lutnick, and high-level Representatives of Mexico. I look forward to participating in those negotiations, with President Sheinbaum, as we attempt to achieve a “deal” between our two Countries."
• Sheinbaum noted the same agreement in a message on X a short time ago: We had a good conversation with President Trump with great respect for our relationship and sovereignty; we reached a series of agreements... They are pausing tariffs for one month from now.."
• Trump's message doesn't mention separate tariffs on Canada and China, with Trump scheduled to hold a second call of the day with Prime Minister Justin Trudeau at 15:00 ET 20:00 GMT. 

The January ECB decision brought few surprises, with a 25bp cut delivered alongside unchanged guidance and reaffirmed confidence in the inflation outlook (MNI’s full review is here). Post-decision ECB-speak has similarly been unsurprising, while customary post-meeting source reports provide did not trigger any meaningful repricing in EUR rates (with other domestic and global drivers more in focus). 

• Reuters’ sources piece on Thursday evening largely re-iterated the key themes from the MNI Policy Team’s pre-January meeting reporting. MNI’s story highlighted that a 25bp cut in March is widely expected amongst policymakers, while there are divisions over the timing of a potential third cut.
• Bloomberg sources suggested the ECB may stop describing monetary policy as “restrictive” come March. Expectations around such a move may develop further following the release of an ECB staff paper on neutral rates this Friday. We expect this report to contextualise President Lagarde’s most recently cited neutral range of 1.75-2.25%, which was a little tighter than the 1.75-2.50% range provided at the December ’24 press conference.
• The week ahead sees Executive Board appearances from Chief Economist Lane (Wednesday) and Vice President de Guindos (Friday).
• In the following publication, we provide a summary of ECB-speak between January 30 and February 3: 250203 - Weekly ECB Speak Wrap.pdf

• CAD rates have seen a sizeable paring of earlier gains on Mexico President Sheinbaum saying the US has agreed to pause tariffs for one month (since confirmed by Trump).
• There’s the clear assumption here that Canada will see a similar development (presumably helped by last week’s Reuters piece on the potential for a delay to Mar 1) but nothing concrete has come since Trump and Trudeau’s earlier call and with another call set for 1500ET today.
• Dec’25 CORRA futures implied yields have lifted some 8bps intraday but are still 12bp lower on the day. They're back close to where they traded at the US crossover after thin overnight trade.
• Terminal CORRA yields are seen at 2.27% (BoC neutral rate 2.25-3.25%), 45bp lower since Trump’s inauguration.
• As for the very near-term, odds of an inter-meeting cut from the BoC have been trimmed from earlier levels, with one-month OIS showing almost 3bp of cuts vs between 4-5bp earlier. For the meeting itself on Mar 12, there are 27.5bp of cuts prices vs 19bp on Friday.