POWER: Mid-Day Power Summary: CWE, Nordic March Power Track Weekly Losses
Feb-14 12:28
French March power is tracking a weekly net decline of above 14%, while the German equivalent is tracking an increase of almost 9%. A sharp pullback in EU gas prices has weighed on power markets, while forecasts for milder weather are limiting heating demand expectations. Nordic March power is tracking a weekly net loss of almost % due to milder weather, improved hydro conditions and losses in neighbouring markets.
- Nordic Base Power MAR 25 unchanged at 41.25 EUR/MWh
- France Base Power MAR 25 down 2.4% at 79.84 EUR/MWh
- Germany Base Power MAR 25 down 0.2% at 99 EUR/MWh
- EUA DEC 25 up 1% at 78.82 EUR/t CO2e
- TTF Gas MAR 25 down 2.7% at 49.995 EUR/MWh
- TTF front month is extending the decline this week to fall around €10/MWh from a peak of €59.39/MWh on Feb. 11 under growing calls from member states to relax EU storage targets. Potential Ukraine peace talks, strong LNG imports driven by record US exports are adding bearish pressure and with the possibility of a correction to high net long market positioning.
- EU ETS December 2025 allowances are tracking a weekly net decline of just above 4%%, weighed on by forecasts for milder weather and sharp losses in EU gas prices. EUAs have reversed earlier losses to trade higher on Thursday, diverging from EU gas, with focus on low renewables output.
- EU GHG emissions declined by 0.6% on the year to 767mn tons in the third quarter of 2024, with top economies lowering emissions while growing the GDP.
- The latest weekly German EUA CAP3 auction cleared lower at €75.84/ton CO2e, compared with €80.71/ton CO2e in the previous auction a week ago
- Governments are expected to inch closer to a global carbon price with discussions expected to continue at the next UN’s IMO meeting on 17-21 February.
- The IEA estimates that the EU’s power demand to rise by 1.7% per year in 2025-2027, with demand to rise back to 2021 levels by 2027.
- EnBW is inaugurating the 300MW Marbach 4 grid stabilisation plant in southern Germany.
- Electrabel’s 445MW Doel 1 nuclear reactor is permanently shutting down on Friday evening.
- Vattenfall is unlikely to decide on new nuclear power investments before 2029, with the company evaluating options for large-scale and SMRs at Ringhals.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US DATA: Mortgage Applications Jump Despite Rates At Highs Since May
Jan-15 12:18
- MBA composite mortgage applications jumped 33% (sa) last week, in the first full week for the year, after a four-week cumulative decline of 25% primarily seen in the last two weeks of December.
- Refis jumped 44% on the week vs -36% over that same four-week period, whilst new purchase applications jumped 27% after a cumulative -18%.
- It’s a strong start to the year but seasonal adjustment can be difficult around the festive period and it’s worth remembering that composite applications are still only 48% of 2019 averages (purchases 63%, refis 33%).
- It comes despite the 30Y conforming rate increasing another 10bps to 7.09% for its highest since May 2024, up from a recent low of 6.19% in late September.
- In a further sign of some relative easing in lending standards, the regular to jumbo spread pushed higher again last week, with the regular rate (7.09%) pushing above the jumbo rate (7.05%) for the first time since Nov 2023.
OUTLOOK: Price Signal Summary - Trend Structure In Bunds Remains Bearish
Jan-15 12:18
- In the FI space, the trend in Bund futures is unchanged, it remains bearish and Tuesday’s fresh cycle low reinforces this theme. The contract has cleared key support at 132.00, the Nov 6 low. The clear break of this level strengthens a bearish theme. Sights are on the 130.00 handle next. Key short-term resistance is at 132.78, the 20-day EMA. Gains would be considered corrective.
- The trend condition in Gilt futures is unchanged, the direction remains down and last week’s fresh cycle lows reinforce current conditions. Recent weakness also highlights an acceleration of the trend. Sights are on 88.87 next, a 2.764 projection of the Dec 20 -27 - Jan 2 price swing. Initial resistance is at 90.31, the Jan 9 high. Resistance at the 20-day EMA, is at 91.61. The EMA is seen as an important hurdle for bulls.
FRANCE: Bayrou Government Looks Set To Survive Censure Vote On Thursday
Jan-15 12:00
PM Bayrou’s government looks set to survive a censure vote on Thursday, alleviating some short-term widening risks in OATs against EGB peers. However, medium-term fiscal and political risks remain prevalent in France, limiting the case for OAT outperformance at this stage. OATs continue to underperform PGBs and SPGBs year-to-date, with the 10-Year SPGB/OAT/PGB butterfly currently at 53bps (vs 52bps yesterday and a cycle closing low of ~56.5bps).
- Bayrou’s address attempted to placate parties across the political spectrum. As a partial concession to the left, Bayrou announced a renegotiation of the 2023 pension reform. Local media has reported that the first debates on this topic will begin on Friday.
- Bayrou also advocated for a move towards proportional representation at the next legislative elections – a notion supported by the right-wing Rassemblement National party.
- The Bayrou government will target a 2025 fiscal deficit of 5.4%. This was at the upper end (though still within) the 5.0-5.5% range touted by Finance Minister Lombard last week. Budget Minister Montchalin has said this will entail E53bln of savings. Montchalin noted this morning that a budget will aim to be presented by the end of January.
- A reminder that ex-PM Barnier’s budget proposal entailed a 5% deficit and E60bln of savings.
- The far-left LFI party proposed a no-confidence motion against the government following the speech (as expected), which will be debated tomorrow at 1500CET and voted on at around 1730CET. It is not expected to succeed in ousting Bayou.
