EMISSIONS: EU Mid-Day Carbon Summary: EUAs/UKAs Fall on EU Gas Downward Pressure

• The 10yr Yield is getting interesting: US Tnotes made another attempt at Monday's Fast Market printed high of 109.15+, the 10yr Yield printed a 4.4601% low on Monday.
• As mentioned previously, the next area of interest comes at 109.29, not a Tech level, but where it was trading at pre 18th December FOMC Hawkish meeting.
• For Charts fan, the US 10yr Yield could have a wide Head and Shoulder?
• Nonetheless, further push lower in the Yield will open to the 4.40% mark, and below the latter, down to 4.3440%.
• Today, these levels equates to 109.29 and 110.09+ respectively.

(Chart source: MNI/Bloomberg):

• MBA composite mortgage applications increased 2.2% (sa) last week after -2.0% the week prior, with refis (12%) offsetting some recent weakness for new purchases (-3.5%).  
• Composite applications have broadly moved sideways since jumping 33% early in January, although are still only 48% of average 2019 levels (new purchases 61%, refis 34%).
• The 30Y conforming rate dipped 5bps to 6.97%, down from the recent high of 7.09% from the week to Jan 10 but holding most of the push higher from recent lows of 6.13% in September. 

• A number at the top end of the 3-4% range and we think there is a good chance that come March we see a repeat of the December vote with no additional dissenters joining Dhingra, Ramsden and Taylor in looking for front-loaded sequential cuts.
• A number at the bottom of the range we think opens up the possibility of potential changes to guidance as soon as the March meeting alongside potential additional members preferring sequential cuts.
• In our view this number could also impact the voting outcome for this week’s meeting. A 4% print may be of concern to Greene or Pill, for example, and may push them into a more cautious stance (resulting in potentially a 7-2 or 6-3 vote split, joining Mann as hawkish dissenters).
• Conversely, a print very close to 3% would be unlikely to see any hawkish dissenters other than Mann (it may even push her to vote for a 25bp cut) and there would also then be the possibility of a member potentially voting for a 50bp cut (although we see a high bar for this at this stage).
• The second crucial information that we don’t have access to yet, but that the MPC has already seen is the Decision Maker Panel data. The full data for this will be released at 14:00GMT, two hours after the decision and MPR will be published. We don’t put anywhere near as much weight on this as the Agents’ pay survey, but it is one of the most closely watched surveys for MPC members.

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