From now until deadline day (though a deal is expected tomorrow) I'll be continuously updating this post with news from as many sources as possible (time of the published article or tweet is in parentheses, NOT the time at which I posted the update):
Wednesday
Update 12 (4:46 PM): Bulls Have Fallen Out Of Consideration (via Wojnarowski)
Bulls have fallen out of consideration for TMac and Houston focus on negotiating draft pick protection to complete NY deal, sources say. "I guess Chicago could emerge again," a source involved in talks told Y! Sports, "but it doesn't look that way now."
Update 11 (3:12 PM): Rockets Leaning Towards Keeping T-Mac? (via Sean Deveney) [Not surprised at all to see this...]
But on Wednesday, sources told SN that the Rockets are now indicating they are leaning toward not trading McGrady-for now, at least. Houston, apparently, is unhappy with the offers it has gotten from the Bulls and the Knicks, which would involve the Rockets taking on too much long-term salary and not getting enough young assets in return.
Update 10 (11:50 AM): Rockets Interested Solely In Draft Pick Protection (via Berger)
As of Wednesday morning, Knicks president Donnie Walsh and Madison Square Garden chairman James Dolan were still deliberating the level of protection they'll require on the 2011 and '12 first-round picks involved in their offer for Tracy McGrady. The key to the Bulls' efforts to circumvent the Knicks' proposal is recruiting a third team with extra first-round picks. One person close to the negotiations said it did not appear that Chicago was having any success on that front.
Draft-pick protection is the only issue Houston cares about in this trade, sources say. The luxury tax savings -- approximately a $7 million swing in their favor -- isn't nearly as significant an issue as getting the most favorable protection possible on the Knicks' picks.
Update 9 (11:04 AM): Hill In Deal With Rockets? (via Marc Spears)
If the New York Knicks and Houston Rockets work out an agreement for Tracy McGrady, Knicks rookie Jordan Hill expects to be in the deal, a source close to him said. The Knicks have made it clear they'll be willing to include Hill if it helps them move Jared Jeffries' contract.
Trading Hill and Jeffries would clear more than $9 million in salary-cap space, allowing the Knicks to possibly sign two max-level free agents this summer.
Update 8 (9:46 AM): Walsh Doesn't Intend To Deal Hill (via Real GM)
A proposed trade between the Knicks and Rockets is losing steam, according to a person familiar with the talks.
"It's less likely than it was on Monday," said the source. "But you never know."
...
Multiple sources claim that Walsh has no intention of trading Jordan Hill.
"Donnie is not giving up on Jordan," said one Knicks source. "He told me he's not trading him."
Update 7 (4:36 AM): Morey Getting Cold Feet? (via HoopsWorld) [... I don't normally trust HoopsWorld.]
Knicks president Donnie Walsh is willing to let go of Hill in order to unload Jeffries' contract. But Rockets GM Daryl Morey was getting cold feet in the afternoon about taking on Jeffries' two-year deal and limiting Houston's 2010 cap space, and it was thought a third team might be needed.
"I don't think that would be enough for Houston," one source said early last night. "There's no deal on the table that's acceptable to all parties."
Bulls have fallen out of consideration for TMac and Houston focus on negotiating draft pick protection to complete NY deal, sources say. "I guess Chicago could emerge again," a source involved in talks told Y! Sports, "but it doesn't look that way now."
But on Wednesday, sources told SN that the Rockets are now indicating they are leaning toward not trading McGrady-for now, at least. Houston, apparently, is unhappy with the offers it has gotten from the Bulls and the Knicks, which would involve the Rockets taking on too much long-term salary and not getting enough young assets in return.
Update 10 (11:50 AM): Rockets Interested Solely In Draft Pick Protection (via Berger)
As of Wednesday morning, Knicks president Donnie Walsh and Madison Square Garden chairman James Dolan were still deliberating the level of protection they'll require on the 2011 and '12 first-round picks involved in their offer for Tracy McGrady. The key to the Bulls' efforts to circumvent the Knicks' proposal is recruiting a third team with extra first-round picks. One person close to the negotiations said it did not appear that Chicago was having any success on that front.
Draft-pick protection is the only issue Houston cares about in this trade, sources say. The luxury tax savings -- approximately a $7 million swing in their favor -- isn't nearly as significant an issue as getting the most favorable protection possible on the Knicks' picks.
Update 9 (11:04 AM): Hill In Deal With Rockets? (via Marc Spears)
If the New York Knicks and Houston Rockets work out an agreement for Tracy McGrady, Knicks rookie Jordan Hill expects to be in the deal, a source close to him said. The Knicks have made it clear they'll be willing to include Hill if it helps them move Jared Jeffries' contract.
Trading Hill and Jeffries would clear more than $9 million in salary-cap space, allowing the Knicks to possibly sign two max-level free agents this summer.
If the New York Knicks and Houston Rockets work out an agreement for Tracy McGrady, Knicks rookie Jordan Hill expects to be in the deal, a source close to him said. The Knicks have made it clear they'll be willing to include Hill if it helps them move Jared Jeffries' contract.
Trading Hill and Jeffries would clear more than $9 million in salary-cap space, allowing the Knicks to possibly sign two max-level free agents this summer.
A proposed trade between the Knicks and Rockets is losing steam, according to a person familiar with the talks.
"It's less likely than it was on Monday," said the source. "But you never know."
...
Multiple sources claim that Walsh has no intention of trading Jordan Hill.
"Donnie is not giving up on Jordan," said one Knicks source. "He told me he's not trading him."
Update 7 (4:36 AM): Morey Getting Cold Feet? (via HoopsWorld) [... I don't normally trust HoopsWorld.]
Knicks president Donnie Walsh is willing to let go of Hill in order to unload Jeffries' contract. But Rockets GM Daryl Morey was getting cold feet in the afternoon about taking on Jeffries' two-year deal and limiting Houston's 2010 cap space, and it was thought a third team might be needed.
"I don't think that would be enough for Houston," one source said early last night. "There's no deal on the table that's acceptable to all parties."
Tuesday
Update 1 (9:55 PM): Knicks Finalizing Deal To Land McGrady (via Chris Mannix)
The New York Knicks are finalizing a deal to acquire Houston Rockets forward Tracy McGrady, an NBA source told SI.com.
The framework of the deal involves sending McGrady to New York for forward Jared Jeffries, guard Larry Hughes and forward Jordan Hill. The Knicks and Rockets have agreed to swap 2011 first round picks and the Knicks will send the Rockets their first round pick in 2012.
The only outstanding issues involve protection for the draft picks. The deal could be completed as early as tomorrow.
Update 2 (10:06 PM): Rockets May Trade McGrady Wednesday (via Mark Berman)
NBA sources told FOX 26 Sports Tuesday the Houston Rockets have narrowed their list of teams to work out a trade for guard Tracy McGrady to the New York Knicks and the Chicago Bulls.
Sources close to the talks told FOX 26 the Rockets are expected to make a decision Wednesday.
Update 3 (10:15 PM): Rockets Mull Offers (via Marc Stein)
The Houston Rockets have narrowed their long-running quest to trade Tracy McGrady to offers from the New York Knicks and Chicago Bulls and plan to choose between the offers Wednesday, according to sources with knowledge of the Rockets' thinking.
One source close to the process told ESPN.com that the Rockets, after intense talks with both teams leading up to Thursday's trading deadline, are determined to finalize a deal for McGrady and move on with their season.
The source said Tuesday night: "I expect it to happen tomorrow."
...
Although the complete specifics of the Bulls' proposal could not be immediately confirmed, Chicago has multiple expiring contracts to package in a deal for McGrady's $22.5 million expiring contract. Those include longtime Rick Adelman favorite Brad Miller, Jerome James and the increasingly coveted Tyrus Thomas, who is being pursued in separate trades by several teams, including New York, San Antonio and Denver.
Update 4 (10:46 PM): Knicks, Rockets Close To McGrady Deal (via Ken Berger)
The Knicks and Rockets are in the final stages of negotiating a blockbuster trade that would send Tracy McGrady to New York, with the Bulls still in the game based on the final issue of draft-pick compensation, CBSSports.com has learned.
The Knicks would get McGrady in exchange for Jared Jeffries, Larry Hughes, Jordan Hill and draft pick considerations. The deal hinges on the level of protection the Knicks will require on a 2012 first-round pick that would go to the Rockets in the trade. The deal also would give Houston the right to swap first-round picks with the Knicks in 2011.
Update 5 (10:53 PM): Wojnarowski Twitter Feed
Bulls were gathering information on Tracy McGrady late Tuesday that suggested they were alive in the bidding with NY, a league source said.
Update 6 (11:07 PM) Randy McIlvoy Twitter Feed
A good source of mine has just informed me , Tracy McGrady and his close support group are preparing for a trade to Chicago. The source says it's not a done deal but "likely" to the Bulls. Stay tuned...
Feel free to include your own updates in the comments, although beware of people who are simply quoting the sources above. Try to include new information if you can.