EMISSIONS: Denmark, Luxembourg Pull Back On EU ETS Flexibility Use
Jul-17 14:54
Denmark and Luxembourg said that they will stop using EU ETS flexibility to meet their Effort Sharing Regulation (ESR) obligation for the 2026–2030 period, according to the EC press release. This decision could potentially weigh on EUAs price in the medium term as it will increase EU ETS auction supply from the two countries post-2025.
- ETS flexibility allows nine Member States, including Belgium, Denmark, Ireland, Luxembourg, Malta, the Netherlands, Austria, Finland and Sweden, to cancel a portion of their EU ETS allowances to receive equivalent ESR allocations for sectors like transport, buildings, agriculture, and waste.
- Denmark and Luxembourg are the first to formally withdraw from this flexibility for 2026–2030, meaning they will not cancel any ETS allowances to offset ESR targets during that period.
- The final revision window for 2028–2030 flexibility use remains open until 31 December 2027 for all eligible Member States.
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OPTIONS: Larger FX Option Pipeline
Jun-17 14:49
- EUR/USD: Jun19 $1.1415-25(E2.4bln), $1.1545-50(E1.2bln), $1.1585-00(E3.1bln); Jun20 $1.1600(E1.0bln), $1.1615-25(E1.1bln), $1.1700(E1.1bln)
- USD/JPY: Jun20 Y143.00-15($1.9bln), Y146.00($1.9bln)
- EUR/JPY: Jun20 Y162.10-20(E1.3bln)
- AUD/USD: Jun19 $0.6600(A$1.1bln)
- USD/CNY: Jun20 Cny7.3000($1.4bln)
PIPELINE: Corporate Bond Update: $5B EIB, $3B KFW Priced
Jun-17 14:47
- Date $MM Issuer (Priced *, Launch #)
- 06/17 $5B *EIB 7Y SOFR+50
- 06/17 $3B *KFW 2Y SOFR+26
- 06/17 $675M Islamic Development Bank Sukuk 5Y SOFR+58a
- 06/17 $Benchmark Hyundai Capital AM, 2Y +125a, 2Y SOFR, 3Y +135a, 3Y SOFR, 5J +145a, 5Y SOFR, 7Y +160a
- 06/17 $Benchmark UnitedHealth 3Y +80a, +5Y +95a, 10Y +120a, 30Y +140a
- 06/17 $Benchmark Enterprise Products 3Y +70a, +5Y +90a, +10Y +115a
- 06/17 $Benchmark The Bahamas 11Y 8.5%a
SEK: June 12 Low In EURSEK At Risk If Riksbank Rate Path Troughs At 2.00%
Jun-17 14:40
The Riksbank decision is due tomorrow at 0830BST/0930CET. With consensus leaning heavily towards a 25bp rate cut to 2.00%, focus will be on the policy statement guidance and June MPR rate path projection.
- Developments since March support a downward revision to the rate path from its current flat 2.25% level, but we don’t expect the path to move much below 2.00%. It’s still too early for the Executive Board to signal a material chance of a cut to 1.75% in the baseline projection – the June MPR alternative scenarios are best placed to incorporate a dovish pivot of that nature.
- If the rate path troughs at 2.00% and the policy statement is ambiguous on the chances of further easing, there may be modest hawkish risks to the SEK intraday.
- Overnight ATM EURSEK vols have moved up to 9.7 points ahead of the decision, above the 7.6 YTD average. That pushes the breakeven on an overnight ATM straddle expiring at tomorrow’s NY cut to 40 pips in either direction.
- The lower break-even on that structure aligns closely with last Thursday’s low at 10.9033, and this level may be at risk if the hawkish conditions noted above are realised. Firm support is then seen at 10.7941, the April 4 low.
- MNI’s full Riksbank preview is here.
