EMISSIONS: UK Closely Watches EU CBAM Developments
Mar-12 16:07
The UK is planning to closely follow developments under the EU CBAM, while exploring all options to improve trade and investment with the EU, including linking the emissions trading schemes, Spencer Livermore, financial secretary to the Treasury, told the UK’s House of Lords.
- “We also continue to explore all options to improve trade and investment with the EU, which includes the UK and the EU giving serious consideration to linking our emissions trading schemes”, Livermore said.
- “Alignment is helpful to UK competitiveness. We recognise that aligning existing regimes can reduce the administration’s burden so we will align where appropriate and we will follow developments on the EU CBAM very closely”, Livermore added.
- The EU is planning to introduce CBAM from the start of 2026 and the UK from the start of 2027.
- EU CBAM has implications for the UK’s trade. If a charge has already been paid under the UK ETS, any difference between that charge and a higher EU CBAM charge would be payable. The reporting obligations will apply to imports from the UK even if no charge is required.
- UKAs rallied following the news that the UK and the bloc are seriously considering relinking both schemes.
- EUA DEC 25 up 1.8% at 69.5 EUR/MT
- ICE UKA Dec25 up 7.3% at 41.3 GBP/MT
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US TSY FUTURES: BLOCK: Huge March'25 2Y/10Y Ultra Bond Steepener
Feb-10 16:04
Huge 2Y/10Y Ultra bond steepener posted at 1047:02ET; DV01 $900,000:
- +22,776 TUH5 102-24.38, post time offer vs.
- -22,776 UXYH5 112-07.5,sell through 112-09 post time bid
STIR: Rally In Euribor Extends Alongside Core FI
Feb-10 15:50
Euribor futures continued to extend higher alongside broader core FI, now +1.0 to + 5.5 ticks through the blues. Headline flow has been relatively limited throughout the day, leaving volumes comfortably below recent averages.
- The back of the whites/front of the reds lead the rally in Euribor. Upside in ERZ5 continues to be capped by the Feb 3 high at 98.125, while ERZ6 has tested the Feb 5 high at 98.010.
- The ERH5/M5 spread has flattened 3.0 ticks today to -30.0 ticks, a fresh multi-week low.
- ECB-dated OIS up to 3bps more dovish than last Friday’s close, with 90bps of easing now priced through year-end.
- ECB President Lagarde will participate in a plenary debate on the ECB’s 2023 Annual Report at the EU Parliament at 1615GMT/1715CET (text will be released). However, any near-term policy signals are unlikely to deviate from the January decision guidance.
| Meeting Date | ESTR ECB-Dated OIS (%) | Difference Vs. Current Effective ESTR Rate (bp) |
| Mar-25 | 2.413 | -25.3 |
| Apr-25 | 2.216 | -44.9 |
| Jun-25 | 2.011 | -65.4 |
| Jul-25 | 1.923 | -74.2 |
| Sep-25 | 1.829 | -83.6 |
| Oct-25 | 1.807 | -85.8 |
| Dec-25 | 1.761 | -90.4 |
| Feb-26 | 1.758 | -90.7 |
| Source: MNI/Bloomberg. | ||
STIR: SOFR Option Update
Feb-10 15:50
More put structures and vol sales:
- +15,000 SFRN5 95.25/95.37/95.62 2x3x1 broken put flys, 0.75/wings over and bid
- -5,000 SFRU5 9593 straddles 39.5 ref 95.945
- -8,000 0QJ5 9550 puts, 2.0 vs 96.08/0.10%
- +8,000 SFRK5 95.62/95.68/95.75 put flys 1.75
- +10,000 SFRK5 95.68/95.75/95.81 put flys 1.5-1.75
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