A source said that the Rockets are now leaning toward not trading Tracy McGrady because they have not received an appealing enough offer to pull the trigger.

Contrary to previous reports, the Knicks are unwilling to put their lottery pick Jordan Hill in the trade.

Since the Rockets do not have a better offer from the Bulls, Houston may be keeping the door open to retaining McGrady as a way of forcing the Knicks to include Hill or otherwise upgrade their offer before Thursday's deadline.

The Knicks would like to have a look at McGrady but, perhaps more importantly, pare the $7 million salary of Jared Jeffries from their 2010-11 payroll.  The Rockets would  go under the luxury tax if the team finalizes a trade with New York.