EMISSIONS: EU End-Of-Day Carbon Summary: EUAs Fall To Lowest In July
EUAs Dec25 are falling to the lowest level since 30 June, weighed by the progress on the EU’s possible retaliation toward US tariff and selling pressure from potential rising short positioning, with the open interest hitting the highest level since early May as of 16 July. UKAs Dec25 are edging down, ending its previous five consecutive winning session, amid influence from EUAs losses.
- EUA DEC 25 down 1.15% at 70.49 EUR/t CO2e
- UKA DEC 25 down 0.22% at 51.03 GBP/t CO2e
- TTF Gas AUG 25 down 1.2% at 34.385 EUR/MWh
- NBP Gas AUG 25 down 2% at 82 GBp/therm
- Estoxx 50 up 1.4% at 5371.19
- The latest EU ETS CAP3 auction cleared at €70.05/ton CO2e, up 0.42% compared with the previous EU auction at €69.76/ton CO2e according to EEX.
- EUA Auction Calendar Week Ahead (Calendar Week 30) - A total of 13.4mn EUAs will be auctioned next week, with 5 auction sessions will be held. The latest EU ETS CAP3 auction cleared at €70.05/ton CO2e, down 0.55% w/w, fallen below the 10, 50 and 100-day averages.
- ICE EUA futures continue to trade above the Jun 30 low. A short-term bearish theme remains in place - for now - and gains appear corrective. Recent weakness has resulted in a breach of a number of support points. Note too that support at €69.60, the May 19 low, has also been pierced. A clear break of this level would highlight a stronger reversal. First resistance to watch is unchanged at €72.79, the Jul 3 high.
- EUA Dec25 implied volatility as of 16 July was at 28.87%, rebounded slightly from the previous all-time low of 28.57% on 10 July, while EUAs Dec25 edged down by 0.42% w/w, suggesting a bearish sentiment while participants are expecting limited disruptions in the short-term.
- 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.
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US DATA: CORRECT:Homebuilders Cutting Prices, Reducing Starts As Sentiment Sinks
[Corrects some index levels] The June National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index hit a 30-month low and 3rd-weakest since 2012 at 32, down from 34 prior and continuing the overall decline since a post-2024 election burst of optimism.
- The index of future sales edged 2 points lower to an 18-month low 40, present sales dropped 2 points to 35, lowest since June 2012 (ie even worse than the Covid pandemic low) and prospective buyer traffic also fell 2 points to 21, a joint 30-month low.
- Falls were seen across 3 of 4 geographical regions (the Midwest was steady), with the lowest readings in the South and West in over a decade.
- As such the nascent pickup a the start of the year has fully reversed, and if anything, prospects look as bleak as ever. The report notes "the use of price incentives increased sharply in June as the housing market continues to soften", with 37% of builders cutting prices, a record in a short series (tracking started in 2022) but notably up from 34% in May and 29% in April.
- Per the NAHB: “Buyers are increasingly moving to the sidelines due to elevated mortgage rates and tariff and economic uncertainty...To help address affordability concerns and bring hesitant buyers off the fence, a growing number of builders are moving to cut prices.”
- The NAHB says that "given current market conditions, NAHB is forecasting a decline in single-family starts for 2025". Data through April suggests that's very likely to be the case (927k SAAR, 2nd weakest since April 2023, and down from 1,078k at end-2024).
- In turn, with multi-family starts steady/lower, there is a good case for residential investment to drag on GDP this year after a rebound in 2024, unless there is a sudden and sustained reversal lower in mortgage rates.
MIDEAST: US VP-Trump May Decide Needs To Take Action To End Iranian Enrichment
US Vice President JD Vance posts on X regarding the situation in the Middle East. A notable section below: "The president has made clear that Iran cannot have uranium enrichment. And he said repeatedly that this would happen one of two ways--the easy way or the "other" way...[President Trump] may decide he needs to take further action to end Iranian enrichment. That decision ultimately belongs to the president. And of course, people are right to be worried about foreign entanglement after the last 25 years of idiotic foreign policy."
- Given the focus on whether the US becomes directly involved in the conflict (see "MIDEAST: Deepest Iranian Enrichment Sites Out Of Israeli Reach Unless US Joins", 15:12BST), Vance's comments could be seen as the clearest signal yet that the White House is considering coming into the conflict on the side of Israel.
- This would counter the comments from British PM Sir Keir Starmer, who said at the G7 summit that "I have no doubt that Trump will stay out of the Israel-Iran conflict"
TARIFFS: Von der Leyen Says US-EU Talks Advancing
- "*VON DER LEYEN: EU-US TRADE TALKS ARE ADVANCING" Bloomberg
- "*VON DER LEYEN: US, EU HAVE AGREED ON JULY 9 DEADLINE" Bloomberg
This of course follows much more hawkish rhetoric from the President earlier today: "“TRUMP SAYS EU NOT YET OFFERING A FAIR DEAL” - RTRS
