POWER: End of Day Power Summary: CWE Power Holds Onto Gains
CWE power futures are holding onto gains towards the end of the session amid rises in the European energy complex, with temperatures in NWE set to drop below the norm from 7 January. Spot prices, specifically in Germany could be slightly higher on the week over 6-10 January amid forecasts for lower wind compared to this week coupled with cooler temperatures.
- Nordic Base Power FEB 25 down 7.3% at 44 EUR/MWh
- France Base Power FEB 25 up 2.9% at 103.8 EUR/MWh
- Germany Base Power FEB 25 up 1.8% at 113 EUR/MWh
- EUA DEC 25 up 3% at 75.19 EUR/MT
- TTF Gas FEB 25 up 2.8% at 50.273 EUR/MWh
- Rotterdam Coal FEB 25 up 0.3% at 113.45 USD/MT
- TTF prices continue to climb, driven by the suspension of gas transit through Ukraine following the expiration of the Russia-Ukraine agreement at year-end. Additional upward pressure comes from Norway's Hammerfest LNG until 9 Jan - further tightening supply.
- EU ETS Dec25 is also holding onto gains, reflecting price rise in EU gas and coal – bolstered by predictions of lower wind generation in Northwest Europe heading into next week —particularly in Germany—which is expected to enhance fossil fuel usage this week.
- The EU power sector saw a 59% reduction in emissions compared to 1990, driven by increased renewable energy use, while power demand remained low, primarily due to weak industrial consumption.
- Germany's cartel office is investigating power price spikes in late 2024, prompted by low wind and solar output during dunkelflaute period.
- France's net power exports soared to their highest since at least 2005 at 89TWh in 2024, fuelled by robust nuclear and hydropower production and subdued domestic demand.
- EdF has extended the planned outage at its 1.62GW Flamanville 3 to 9 January from 5 January.
- Fully electric vehicles accounted for nearly 89% of new car sales in Norway in 2024, with a total of 128,691 cars registered, reflecting a 1.4% year-over-year increase.
- The unplanned outage of the 650MW Estlink 2 power link between Estonia-Finland is expected to raise electricity prices in Estonia by €0.014/kWh per year, totalling an estimated €39mn in costs.
- Spanish hydropower reserves last week - calendar week 52 – continued to climb from the previous week to reach 51.7% of capacity as nuclear generation continued to increase and power demand fell sharply.
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US DATA: Declining Hires Rate Chimes With Other Signs Of Cooling Rehiring
- Within the JOLTS report, the quits rate likely surprised higher in October (no consensus estimate but the first rounded increase since May 2023) but the hires rate pushed lower again for a softer caveat.
- The overall hires rate fell from 3.51% to 3.34% in October, coming close to June’s recent low of 3.31%, in a move echoed by the private sector hire rate falling from 3.85% to 3.65% vs recent lows of 3.62%.
- Note that October's adverse weather could have played a role, considering there were pronounced declines in leisure & hospitality (-0.7pps) and construction (-0.5pps). That wasn't the entire story though, with financial activities, information and professional & business services all declining by -0.3pp as well.
- Broadly speaking, these recent lows for hire rates are notable, being levels last seen in 2013 when excluding early pandemic disruption.
That chimes with the discrepancy between still historically low initial jobless claims versus a continued climb in continuing claims, with firms seemingly favoring reducing hiring activity rather than more earnestly turning to layoffs to reduce costs.
SOUTH KOREA: YTN-Def Min Says Martial Law Remains In Place Until Pres. Lifts It
South Korean outlet YTN is reporting that according to the Ministry of National Defense, martial law will remain in place until the president lifts the measures. Below is an abridged transcript from YTN (full transcript here)
- [Anchor] We're continuing with the breaking news. The National Assembly has passed a motion to lift martial law. They're demanding that the martial law declaration be invalidated. What is the Ministry of National Defense's position?
- [Reporter] As you mentioned, the National Assembly has passed a motion to lift martial law, but martial law will remain in place. They say they will continue to maintain martial law until the president gives separate instructions. [...]
- [Anchor] President Yoon Seok-yeol has declared martial law, and the National Assembly has passed a resolution demanding the lifting of martial law, but the president has not yet lifted the martial law declaration. So the military is currently taking over public security administration. There has been no official statement from the military authorities, right?
- [Reporter] Yes. As I said earlier, martial law will continue to be maintained until the president gives separate instructions.
Chosun reports "some troops are still waiting inside the National Assembly. Some of the martial law troops are waiting for orders, having laid down their military gear. It is still undetermined whether all martial law troops that entered the National Assembly will withdraw."
- The situation remains fluid with all focus now on President Yoon (on whether he issues orders to lift martial law) and the Ministry of National Defense and the leadership of the armed forces (on whether they maintain their stance of waiting for the president's orders or follow the National Assembly's instructions to lift martial law).
STIR: SOFR Call Trade Turns Two-Way
Call trade turns two way as the South Korean geopol risk has taken a step back for the moment, short end rate support continues as the narrative swings back to whether the Fed will cut rates at the December 18 FOMC or not. Projected rate cuts into early 2025 moderating after surging late Monday following Fed Gov Waller's comments, current levels vs. late Monday (*) : Dec'24 cumulative -17.2bp (-20.0bp), Jan'25 -23.6bp (-24.3bp), Mar'25 -37.9bp (-37.5bp), May'25 -45.8bp (-45.5bp). Additional first half trade:
- -5,000 0QZ4 96.50 calls, 1.5 vs. 96.17/0.14%
- -40,000 SFRZ4 95.56/95.68 call spds, 5.0 vs. 95.58/0.44%
- +4,000 0QF5 96.50/97.00 call spds, 5.0 96.295/0.15%
- +30,000 0QZ4 96.43/96.62 call spds, 2.25-2.5 vs. 96.22
- -7,000 SFRF5 95.62/95.75/95.87/96.00 put condor, 5.0 ref 95.80/0.06%
- 11,500 SFRF5 95.56/95.68 put spds, 2.5
