EMISSIONS: EU End of Day Carbon Summary: EUAs/UKAs Fall on EU Gas losses
Mar-17 16:50
EUA/UKA Dec25 is trending downward on EU gas price losses, with correlation between carbon and gas remaining high. Meanwhile, upward-revised wind generation forecasts in both NWE and UK also amplify bearish sentiments.
- EUA DEC 25 down 1.1% at 70.19 EUR/t CO2e
- UKA DEC 25 down 2% at 43.41 GBP/t CO2e
- TTF Gas APR 25 down 2.7% at 41.16 EUR/MWh
- NBP Gas APR 25 down 3% at 100.8 GBp/therm
- Estoxx 50 up 0.8% at 5443
- TTF front month is softer today amid mixed temperatures at the end of the winter season and further signs that EU member states are pushing for more flexible gas storage targets.
- Correlation between EUA/TTF for 30-day period remains high at 0.57.
- Correlation between EUA/UKA for 30-day period remains high at 0.69.
- The EUA Dec25 premium to the UK equivalent remains stable at €18.49/t CO2e as both contracts shared a similar movement on the day.
- The trend outlook in ICE EUA futures is bearish and recent short-term gains appear corrective - for now. Initial firm resistance to watch is €73.59, the 50-day EMA. First resistance is at $71.70, the 20-day EMA. Moving average studies are in a bear-mode position, highlighting a dominant downtrend. A resumption of weakness would open the next key support at €64.05, the Dec 17 ‘24 low.
- The latest EU ETS CAP3 auction cleared at €68.53/ton CO2e, up 0.48% compared with the previous EU auction at €68.2/ton CO2e according to EEX.
- Eurelectic, an EU electricity association, has called for an EU-UK ETS linkage to avoid the risk of double payment of carbon prices under CBAM, due to a lack of documentation about electricity origin and carbon payment history, it said.
- Global emissions from building sector in 2024 stopped rising for the first time since 2020, according to a latest report by the UN Environment Programme (UNEP) and the Global Alliance for Buildings and Construction (GlobalABC).
- Germany’s chancellor in waiting Friedrich Merz, has promised to dedicate €100bn to Climate and Transformation Fund (KTF) over a period of 10 years, as part of the newly agreed €500bn infrastructure fund, according to Spiegel Politik.
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US TSYS: Yields Pull Back Again With Consumer Growth Story In Question
Feb-14 21:08
Treasuries outperformed global counterparts Friday, fully completing a reversal from a midweek selloff.
- A large miss in January retail sales (-0.9% M/M vs 0.7% prior, -0.2% consensus) represented the biggest sequential drop in 22 months, with a similarly weak "control group" figure leading to a 0.5pp downgrade to the Atlanta Fed's GDP nowcast (to 2.3% GDP growth in Q1, i.e. no acceleration from Q4).
- That was enough to see the 10Y Treasury yield drop 7bp in the subsequent half hour, continuing the downtrend seen beginning in the immediate aftermath of Wednesday's hot CPI release. 10Y yields dropped over 21bp from the Wednesday high to Thursday's low, ultimately ending a tumultuous week 1.5bp lower.
- Yields ticked a little higher in afternoon trade Friday but the curve leaned bull steeper on the day, with the belly outperforming: 2-Yr yield is down 4.6bps at 4.261%, 5-Yr is down 5.7bps at 4.3328%, 10-Yr is down 5.1bps at 4.4782%, and 30-Yr is down 3.9bps at 4.6982%.
- In futures: Mar 10-Yr futures (TY) up 9/32 at 109-08 (L: 108-26 / H: 109-15.5).
- Other data (industrial production mixed, import prices soft) had little lasting impact.
- The coming week’s data schedule is relatively light, due in part to Monday’s Presidents Day holiday (SIFMA recommends bond cash close, equities closed), with initial jobless claims, February prelim PMIs, and regional Fed manufacturing surveys among the highlights. Supply includes 20Y Bond and 30Y TIPS auctions.
- We also get plenty of Fed communications including the January meeting minutes, and speaking appearances by both doves (Gov Waller) and hawks (St Louis Pres Musalem).
USDCAD TECHS: Bear Cycle Extends
Feb-14 21:00
- RES 4: 1.4948 High Mar 2003
- RES 3: 1.4814 High Apr 2003
- RES 2: 1.4503/1.4793 High Fb 4 / 3 and key resistance
- RES 1: 1.4380 High Feb 10
- PRICE: 1.4175 @ 16:54 GMT Feb 14
- SUP 1: 1.4107 50.0% retracement of the Sep 25 ‘24 - Feb 3 bull cycle
- SUP 2: 1.4011 Low Dec 5 ‘24
- SUP 3: 1.3944 61.8% retracement of the Sep 25 ‘24 - Feb 3 bull cycle
- SUP 4: 1.3894 Low Nov 11 ‘24
USDCAD broke lower Thursday, breaking out of a tight trading range this week and remains soft. A key support at 1.4261, the Jan 20 low, has been cleared and this signals scope for an extension of the current bear cycle - a correction. Scope is seen for a move towards 1.4107, a Fibonacci retracement. Initial firm resistance to watch is 1.4380, the Feb 10 high. A break would highlight an early bullish reversal signal.
OPTIONS: Mixed SOFR Rates Trade To Cap Week
Feb-14 20:47
Friday's US rates/bond options flow included:
- SFRH5 95.62p, traded half in 2k.
- SFRH5 96.93c, traded 0.25 in 4k.
- SFRH5 95.75/95.62ps 1x2, Traded 3.75 in 3k.
- SFRK5 97.00c, traded for 0.75 and 1 in 3k.
- SFRU5 95.93/95.81/95.68p fly, traded 1 in 1.5k
- SFRU5 96.50c, traded for 6.5 in 1.5k.
- SFRU5 95.87^, traded for 36 in 5k.
- SFRJ5 95.87/95.75/95.68p fly 1x3x2 with SFRK5 95.81/95.68/95.62p ladder 1x3x2, bought for 10 in 2k.
- SFRM5 95.68p, sold at 2.5 in 10k.
- 0QH5 96.00c, bought for 13 in 3k.
- TYH5 107p, bought for 11 in 15k
- TYJ5 107p, bought for 11 in 17k total.
- TYJ5 107/106ps, bought for 7 in 15k total.
