POWER: French DA Clears At Discount to Germany For Second Session
Feb-13 11:57
French day ahead cleared at a discount to Germany for the second consecutive session, with costs diverging, amid the continued increase of rising French wind output coupled with stable nuclear availability, which offset an increase in power consumption in France. Germany climbed owing to lower wind on the day and firm power demand - raising the residual load in the region slightly.
- The German day-ahead spot settled at €179.14/MWh from €172.12/MWh on the previous day.
- The French day-ahead spot cleared at €147.95/MWh from €150.63/MWh on the previous day.
- Germany was at a €31.19/MWh premium from a €21.49/MWh premium in the previous session.
- Wind output in Germany is forecast to decrease to 4.18GW, or 6% load factor during base load on Friday, down from 8.8GW on Thursday according to SpotRenewables.
- Wind will then continue its decline on 15 February to be at 2.43GW, or 4% load factor – however, with typically lower weekend demand prices could still drop from the previous session.
- Power demand in Germany is forecast to fall to 62.25GW on Friday from 63.55GW on Thursday amid mean temperatures in Dusseldorf forecasts to edge down to 1C on Friday from 1.1C on Thursday and below the seasonal average of 4C, according to Bloomberg.
- Demand will then be at 53.98GW on 15 February.
- Germany is expected to be a net importer on Friday, importing up to 16GW in the evening, said LSEG analyst Naser Hashemi, cited by Reuters.
- Residual load in Germany is forecast to rise to 55.9GWh/h on Friday, up from 53.74GWh/h on Thursday according to Reuters.
- In contrast, wind output in France is forecast to rise to 4.84GW, or 19% load factor during base load on Friday from 2.23GW on Thursday according to SpotRenewables.
- Wind will then be at 4.51GW, or also a 19% load factor on 15 February.
- Power demand in France is forecast to rise to 66.77GW on Friday from 64.88GW on Thursday amid mean temperatures in Paris forecast to fall to 1.3C on Friday from 4.9C on Thursday and below the seasonal average of 5.1C, according to Bloomberg.
- Demand will then be at 64.39GW on 15 February
- Nuclear availability in France was stable on the day at 81% of capacity as of Thursday morning, RTE data showed, cited by Bloomberg.
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US INFLATION: PPI Details Key As Ever To PCE Readthrough
Jan-14 11:53
Besides setting the tone for Wednesday's CPI data, the December PPI report (0830ET Tuesday) will help shape expectations for the monthly PCE print which is due out on Jan 31, two days after the FOMC decision.
- In contrast to CPI expectations, core sequential PPI readings are seen slightly hotter in December than November. In particular, ex-food/energy/trade is seen picking up to 0.3% M/M from 0.1% prior (0.05% unrounded). Headline Final Demand PPI is seen at 0.4% M/M for a second consecutive month.
- Initial pre-PPI estimates point to core PCE inflation at ~0.20% M/M, softer than CPI in outright terms but on a relative basis an acceleration from the softer 0.115% in Nov. Analyst estimates we've seen range from 0.18% (Goldman) to 0.27% (Deutsche), with a median 0.20% and mean 0.21%.
- To give a sense of expectations by PCE-translated PPI categories, for which health care services, portfolio management and domestic airfares will be the focus:
- Nomura is a above consensus seeing a 0.24% M/M PCE print (with core CPI at 0.27%), and note in particular PPI domestic airfares and portfolio management /investment advice prices rising on an NSA basis by by 2.0% and 1.5% M/M respectively.
- Citi, which is in line with consensus on core PCE at 0.20% and core CPI at 0.23%, sees PPI ex-food/energy/trade up 0.3% M/M (in line with consensus) "mainly because of certain financial services components such as portfolio management."
- As we note in our CPI preview, Fed leadership is likely to discount the signal from a surprising PCE print if it's driven by categories such as portfolio management.
US TSYS: Paring Overnight Gains Ahead Dec PPI
Jan-14 11:52
- Treasuries are scaling back from early London session highs, marking the low end of the range in the last few minutes.
- Focus is on December PPI at 0830ET (prior, est): Final Demand MoM (0.4%, 0.4%), YoY (3.0%, 3.5%) while Ex Food and Energy MoM (0.2%, 0.3%), YoY (3.4%, 3.8%). Wednesday’s US CPI report headlines the weekly calendar, however, with with Bloomberg consensus currently looking for a 0.2% M/M print for core CPI in what’s a close call with a 0.3% M/M.
- Tsy Mar'25 10Y futures tapping 107-10 (+2.5) low, trading 107-11 last. Initial technical support at 107-06 (Jan 13 low)followed by 107-04 (Low Apr 25 ‘24 and a key support). 10Y yield +.0042 at 4.7821%, curves mixed with 2s10s -.014 at 39.629, 5s30s +1.273 at 37.574.
- Scheduled Fed speakers for today include KC Fed Schmid (text TBA, Q&A) at 1000ET followed by NY Fed Williams open remarks (text, no Q&A) at 1500ET.
- Tsy auction: $85B 42D CMBs at 1130ET.
US TSY FUTURES: Short Setting In WN Dominated On Monday
Jan-14 11:46
OI points to a mix of net short setting (TU, UXY, US & WN) and long cover (FV & TY) during yesterday’s move lower in Tsy futures.
- Net short setting in WN futures accounted for all of the net DV01 equivalent positioning movement on the curve, as the net swings in the remaining contracts offset.
| 13-Jan-25 | 10-Jan-25 | Daily OI Change | OI DV01 Equivalent Change ($) |
TU | 4,309,879 | 4,296,021 | +13,858 | +529,282 |
FV | 6,134,293 | 6,154,065 | -19,772 | -819,298 |
TY | 4,660,490 | 4,677,693 | -17,203 | -1,090,129 |
UXY | 2,225,372 | 2,220,460 | +4,912 | +421,706 |
US | 1,937,239 | 1,929,471 | +7,768 | +941,969 |
WN | 1,796,756 | 1,782,817 | +13,939 | +2,526,574 |
|
| Total | +3,502 | +2,510,105 |
