EMISSIONS: EU Body Recommends Carbon Removals Integration to ETS
Feb-21 11:17
The European Scientific Advisory Board suggested gradually integrating carbon removals into EU ETS will create an innovative financing model for scaling up removals projects while limiting public budget dependency, it said.
- The current EU ETS framework policy doesn’t include mechanisms to incentivise removals. However, the latest ETS directive does require the EC to report on how removals could be reported and accounted for under the EU ETS by 31 July 2026.
- The board said an alternative pricing instrument, separately to the current EU ETS, should be developed, and an intermediary institution should oversee the supply and demand of removal credits.
- The board also recommend that emitters are required to contribute to the future removal of the emissions they emit at present.
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DUTCH AUCTION PREVIEW: New 10-year DSL To Be Launched Via DDA On March 4
Jan-22 11:17
DSTA will launch a new 10-year benchmark DSL via Dutch Direct Auction (DDA) on Tuesday March 4, 2025.
- The bond will have a maturity of July 15, 2035.
- The target volume is E4-6bln.
- The coupon will be announced on February 28, 2025, with initial spread guidance announced on March 3, 2025. Reference bond: 2.50% Feb-35 Bund (ISIN: DE000BU2Z049)
STIR: Next Fed Cut Still Seen Around June Or July
Jan-22 11:17
- Fed Funds implied rates range from unchanged to 1bp lower overnight, broadly consolidating yesterday’s intraday push higher.
- It leaves a familiar path, with a next 25bp cut seen at one of the June or July meetings along with circa 40bp of cumulative cuts for 2025.
- Today sees another light macro docket and the FOMC of course in media blackout, leaving political headlines likely in the driving seat. Trump yesterday afternoon said his threats to impose 25% tariffs on Mexico and Canada and 10% on China on Feb. 1 have nothing to do with renegotiating the USMCA treaty, but instead it's about the flow of fentanyl into the US. He also said the EU will be in for tariffs.
- Cumulative cuts from 4.33% effective: 0.5bp Jan, 6.5bp Mar, 12.5bp May, 23bp Jun, 26.5bp Jul and 39.5bp Dec.
EURIBOR OPTIONS: Call spread buyer
Jan-22 11:16
ERM5 97.875/98.00cs, bought for 4.5 in 5k.
