EMISSIONS: EU End of Day Carbon Summary: EUAs, UKAs Diverge
Apr-15 15:19
The EUA Dec25-UKA Dec25 spread is narrowing to the lowest since 18 June, with EUAs edging down on a pullback in EU gas prices, while UKAs are holding onto gains.
- EUA DEC 25 down 0.5% at 66.2 EUR/MT
- ICE UKA Dec25 up 0.9% at 47.46 GBP/MT
- TTF Gas MAY 25 down 0.2% at 34.42 EUR/MWh
- NBP Gas MAY 25 down 1.3% at 84.26 GBp/therm
- Rotterdam Coal MAY 25 up 0.3% at 102.4 USD/MT
- TTF front month is extending a small gain yesterday supported by supply outages while the market continues to weigh summer storage refill risks.
- The latest EU ETS CAP3 auction cleared at €66.21/ton CO2e, compared with €64.6/ton CO2e in the previous auction, while widening the discount to the futures price according to EEX.
- The trend in ICE EUA futures remains bearish and last week’s fresh cycle lows reinforce this theme. The latest sell-off resulted in a breach of key support at €61.98, the Oct 9 ‘24 low. Clearance of this level confirms a resumption of the downtrend and paves the way for an extension towards €56.76, a Fibonacci projection. Recent gains are considered corrective. The 20-day EMA, at €66.75, has been pierced. The 50-day EMA is at €69.89.
- The EC has launched a 12-week public consultation on the EU ETS and the Market Stability Reserve (MSR), gathering stakeholder feedback ahead of their planned reviews in 2026.
- UN-backed Net Zero Banking Alliance (NZBA) has adjusted its climate goals lower to more achievable targets to align financing activities with a “well below 2 degrees” target instead of the 1.5 degrees target set in 2021.
- UK’s Ofgem approved a new grid connection reform, replacing the first, come first serve system that was previously in place. Instead, projects will be evaluated by their readiness and importance to deliver the country’s 2030 clean energy goals.
- Global energy-related emissions may have peaked in 2024, but the rise of AI and power-hungry data centres—largely fuelled by coal and gas—is expected to slow the pace of emissions decline over the next decade.
- BNEF revised up energy-related CO2 emissions by 2050 up to 26.8bn tons CO2e in its latest outlook, up from 24.4bn tons CO2e a year earlier, supported by a lower gas price outlook and higher data centre power demand.
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FED: March Economic Projections: Higher Inflation, Weaker Growth, Same Rates
Mar-14 21:28
The MNI Markets Team’s expectations for the updated Economic Projections in the March SEP are below.
- The unemployment rate is likely to rise slightly for 2025 alongside a downgrade in GDP growth, while the 2025 core and headline PCE inflation projections are set to rise again. Changes to later years will likely be limited, however.
- More detail on the shift in Fed funds rate medians is in our meeting preview - we will add more color next week.
FED: Market Pricing Nearly 3 2025 Cuts As Conditions Tighten
Mar-14 21:25
Amid rising government policy uncertainty, sentiment among businesses and consumers has fallen sharply since the start of the year, while equities and the dollar have reversed their post-election rise. Overall, financial conditions have tightened, even if stress is not yet mounting, e.g. no major widening of credit spreads (the accompanying chart shows the Fed’s financial conditions impulse index but only through January).
- Combined with growth fears, this has affected expectations for the Fed’s rate path, with around 18bp more cuts expected in 2025 compared with what was seen after the January FOMC. 65bp of cuts are priced for the year as a whole. 2025 cut pricing reached 71bp before the February inflation data and 76bp before the February payrolls report.
- A rate cut is seen with near zero probability for March’s meeting, but the first full cut is just about priced for June, with a second nearly priced by September.
- Chair Powell has no reason to endorse or refute these expectations – he’s likely to be happy with a press conference that ends with little discernable change in pricing.
CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
Mar-14 21:17
- CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
