POWER: EU Court of Justice Rules Against Hungarian State Aid for Paks II
The EU’s Court of Justice has ruled against the European Commission’s decision to approve state aid from Hungary for the planned 2.4GW Paks II nuclear power station according to Bloomberg.
- “[The Commission] should have ascertained whether the direct award of the contract for the construction of two new reactors to a Russian undertaking complies with EU public procurement rules”, the Court said.
- The Paks II project, backed by Russia’s Rosatom, has been facing major delays after U.S. sanctions on Gazprombank froze payments—triggering financial, political, and transparency issues, Foreign Minister Peter Szijjarto said in June.
- U.S. sanctions imposed in late 2024 on Russia’s Gazprombank—a key financial partner in the Paks II project—have effectively halted payments related to the expansion.
- However, despite financial and logistical hurdles, Rosatom has begun manufacturing key components, such as the reactor vessel, funded internally for now.
- The plant is expected to be operational in the 2030s.
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SONIA OPTIONS: Call spread buyer
SFIU5 96.10/96.25cs, bought for 1 in 1.5k.
GILTS: Initial Support Untested Following UK Labour Market Report
Gilt futures are -25 ticks at 92.01, underperforming Bunds following this morning’s UK labour market report. As noted in earlier bullets, elements of the report were a little stronger-than-expected. However, there are still signs that the labour market is continuing to ease, with pay growth and vacancies falling and most other employment metrics/surveys point to decelerating employment growth in contrast to the LFS series.
- Gilts reached a session low of 91.92 just after the open, leaving initial support at 91.87 (August 8 low) untested.
- This level shields the August 1 low at 91.44, with key support and the bear trigger seen much further out at 91.08 (July 18 low).
- Gilt yields are 2-3bps higher, with the curve lightly bear steepening. The 10-year yield was unable to push through the 4.60% handle at the open. The 10-year Gilt/Bund spread is 3bps wider at 189.5bps.
- The DMO will sell GBP4.75bln of the 4.375% Mar-30 Gilt this morning.
- Otherwise, the domestic calendar is light today. Broader focus remains on this afternoon’s US CPI report.
EQUITIES: Option Expiry on Friday
We have Equity Option expiry this Friday, in Notional terms:
US:
- SPX: $1.29T vs $1.23T (last Friday).
- NDX: $54.97bn vs $52.42bn.
- Amazon: $18.40bn vs $17.48bn.
- Apple: $19.56bn vs $16.75bn.
EU:
- SX5E: €150.77bn vs €148.31bn.
- SX7E: €3.26bn vs €3.15bn.
- DAX: €22.38bn vs €22.13bn.
- UKX: £9.47bn vs £9.56bn.
- Lloyd's: £9.08bn.
