EMISSIONS: EUAs Fall on EU Gas Downward Pressure This Week
EUA Dec25 is trading at a lowest level since 18 Dec 2024 and is tracking a weekly net loss of 5.6%, weighed down by the over 15% losses in EU gas and warmer weather.
- EUA DEC 25 down 0.6% at 66.92 EUR/t CO2e
- EUA Daily Futures down 0.2% at 65.63 EUR/t CO2e
- TTF Gas APR 25 down 2% at 37.475 EUR/MWh
- German Spark Spreads M1 down 10.8% at -19.41 EUR/MWh
- Rotterdam Coal APR 25 unchanged at 95.45 USD/MT
- Estoxx 50 down 1.2% at 5467
- ICE EUA futures daily aggregate traded volume at 52,962 contracts in the previous day, up 35.86% compared with the 30-day average daily volume.
- Correlation between EUA/TTF for 30-day period hit a one-month high at 0.69 in the week, as carbon was downward pressured by gas bearish trend.
- Auction calendar for the day: The next Germany EUA CAP3 auction will clear at 11:00CET. The previous Germany auction cleared at 70.65 EUR/T at a 2.6 cover ratio.
- The 10-day ahead wind output forecast for CWE has been revised lower for the next seven days. Wind output is seen at 18GW to 19.5GW and load factors averaging at 20% from 8 Mar until 16 March, according to SpotRenewables
- The latest month-ahead ECMWF weather forecast for NW Europe suggested mean temperatures are mixed and are forecasted to be below seasonal norm for most days until 19 April.
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MNI: ITALY JAN SRVCS PMI 50.4 (FCAST 50.4); DEC 50.7
- MNI: ITALY JAN SRVCS PMI 50.4 (FCAST 50.4); DEC 50.7
GILTS: Citi Dig Into '24 Gilt Demand, Offshore Took Greatest Share Again
Citi note that “data out at the end of last week completes the picture of who bought all the gilts in ‘24. 45% of ’24 net gilt supply was absorbed overseas, 34% was taken by private domestic investors and 22% was taken by domestic banks.”
- They note that “this was the fifth time in the last six years that overseas investors have taken the greatest share (‘23 the exception), largely thanks to a strong pick-up in demand in the last quarter, a period in which cable depreciated by over 6% and gilts underperformed sharply vs. Bunds.”
- Elsewhere, Citi observe that “net buying by UK banks also had a late surge to the fastest 3-month pace on record, perhaps responding to cheaper ASW levels. In contrast, non-bank domestic demand fell away in late ‘24 to the slowest 3-month pace since early ‘22, despite higher outright yields, perhaps put off by the domestic uncertainty created by the Budget.”
- They conclude with “this highlights the efficiency of the gilt market in offering RV to entice one investor group whenever another one may be stepping back.”
SPAIN DATA: Composite PMI Still Comfortably Expansionary Despite Services Miss
The Spanish services PMI was a little weaker-than-expected at 54.9 (vs 56.8 cons, 57.3 prior). Taken alongside a lower-than-expected manufacturing PMI on Monday, the composite index ticked down to 54.0 (vs 55.9 cons, 56.8 prior). The composite index has nonetheless been in expansionary territory since November 2023, notably outperforming other major Eurozone economies.
We highlight that input price increases were passed through to output charges in January. A similar dynamic was also seen in the manufacturing PMI.
Key notes from the release:
- “The rate of growth in new business in January was rapid, rising to its highest level since April 2023. Panellists noted that demand for their services was strong, and that commercial activities had helped to support new business gains”…. “Latest data did however suggest that growth was centred on domestic markets”
- “In response to higher overall workloads, service providers chose to take on additional staff at a rapid and accelerated pace”.
- “Panellists also noted an upturn in typical labour expenses during January”… “Suppliers were also reported to have increased their prices”… “firms increased their output charges in response to higher operating expenses”.
