EMISSIONS: EU End-Day Carbon Summary: EUAs, UKAs Track Weekly Losses
{EUAs/UKAs Dec25 are falling today and are on track for weekly losses of about 1.5% and 3.8% respectively. Both open interest in the contracts have fallen to their lowest level since mid-December 2024 and late-March while prices have declined, suggesting potential stronger exiting of long holders.
- EUA DEC 25 down 0.74% at 81.82 EUR/t CO2e
- UKA DEC 25 down 1.32% at 56.08 GBP/t CO2e
- TTF Gas JAN 26 up 0.3% at 27.16 EUR/MWh
- NBP Gas JAN 26 up 0.7% at 70.55 GBp/therm
- Estoxx 50 up 0.2% at 5732.37
- The latest Germany ETS CAP3 auction cleared at €82.25/ton CO2e, down 0.42% compared with the previous Germany auction at €82.6/ton CO2e according to EEX.
- TTF front month has recovered slightly after reaching its lowest since April 2024 at €26.80/MWh earlier this morning. A warm weather forecast has added significant pressure this week.
- EEX reported that EUAs secondary market traded volume in November 2025 fall 16% y/y and rise 116% m/m.
- EUA Dec25 options implied volatility fell to an all-time low on 4 Dec, with put open interest rising and calls declining, signalling stable expectations for price swings and caution over downside risks.
- UKA Dec25 options implied volatility as of 4 Dec fell to the lowest level since mid-November, while the call-put volatility skew turned positive for the first time since early November, reflecting stable expectations for volatility and near-term upside risks.
- The UK ETS Authority has set Phase II to run from 2031–2040 and confirmed that banking of allowances between Phases I and II will be permitted, according to its latest report.
- The UK ETS Authority will avoid major system changes in the near term as the UK and EU work toward potential ETS linking, aiming to preserve stability during negotiations, according to its latest report.
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FED: US TSY 17W AUCTION: NON-COMP BIDS $424 MLN FROM $69.000 BLN TOTAL
- US TSY 17W AUCTION: NON-COMP BIDS $424 MLN FROM $69.000 BLN TOTAL
US TSYS: Extending Lows
- Treasuries are extending lows at the moment - tracking German Bunds with no obvious headline of Block driver, and unlikely comment from Fed Miran that: "DATA SUGGEST RATES CAN BE A LITTLE LOWER THAN THEY ARE" while "KEEPING POLICY THAT RESTRICTIVE RUNS UNNECESSARY RISKS," Bbg.
- Currently, Dec'25 10Y contract trades -15 to 112-10 low, 10Y yield at 4.1532% (+.0681). A continuation lower would open 112-06, the Sep 25 low and the next key support.
UK: Labour Risks Falling To 3rd In Polls With Budget Statement Looming
The gov't faces a difficult few weeks ahead of the 26 November budget in the wake of Chancellor of the Exchequer Rachel Reeves' Downing St. speech on 4 November that refused to rule out manifesto-breaking income tax/VAT/National Insurance increases. While there is likely to have been an element of needing to prepare the ground with the public and markets regarding the all-but-confirmed tax hikes (saying "each of us must do our bit for the security of our country and the brightness of its future"), coming three weeks before the budget means the looming spectre of tax increases will retain a dominant position in the news cycle.
- Comes amid the slow, but sustained decline in support for the centre-left Labour Party in opinion polling (see left chart below). Whereas Labour has trailed the right-wing populist Reform UK for several months, it has generally retained a comfortable advantage over the main opposition centre-right Conservatives. However, with the environmentalist Greens having recorded a spike in support under its new left-wing populist leader, Zack Polanski, largely at the expense of Labour, PM Sir Keir Starmer's party now risks being pushed into third place nationally.
- Should Labour's polling numbers slump even further post-Budget, it will put even greater pressure on Reeves and Starmer, and indeed a significantly negative public or market reaction could make Reeves' position untenable. Data from Smarkets shows bettors assigning a 40.6% implied probability that Starmer leaves office in 2026, with the May local elections viewed as a potential reckoning day for the PM.
Chart 1. General Election Opinion Polling by Party, % and 6-Poll Moving Average (LHS) and Combined Vote Share for Labour and Conservatives in General Elections & Opinion Polling, % (RHS)
Source: More in Common, YouGov, Find Out Now, Opinium, Techne, Lord Ashcroft Polls, Focaldata, JL Partners, Freshwater Strategy, Survation, Ipsos, BMG Research, MNI
