EMISSIONS: EU End-Of-Day Carbon Summary: EUAs Rise, UKAs Fall
EUAs Dec25 are edging up, tracking EU gas volatility, with the EUA-TTF intraday correlation tightening to 0.78 in the afternoon. Meanwhile, the market is awaiting the 2024 TNAC figures that are set to be released after close today. UKAs Dec25 are falling amid potential rising shorting activities, as the open interest as of 27 May has been rising steadily since 20 May while the price declined 5.5%.
- EUA DEC 25 up 0.43% at 72.07 EUR/t CO2e
- UKA DEC 25 down 0.63% at 51.72 GBP/t CO2e
- TTF Gas JUN 25 down 0.9% at 36.687 EUR/MWh
- NBP Gas JUN 25 down 0.7% at 87.81 GBp/therm
- Estoxx 50 down 0.9% at 5384
- Correlation between EUA/TTF for 30-day period remained at 0.57.
- Correlation between EUA/STOXX for 30-day period rose to one-week high at 0.40.
- Correlation between EUA/UKA for 30-day period remained stable at 0.55.
- Correlation between UKA/FTSE100 for 30-day period loosened to h0.39.
- The EUA Dec25 premium to the UK equivalent remained at a similar level at €10.41/t CO2e.
- EUA POSITIONING – Speculator positioning in EU ETS futures on the ICE exchange was bullish for the fourth consecutive week with net long positionings at the highest since late March, according to the latest COT data as of 23 May.
- UKA POSITIONING – Speculator positioning in UK ETS futures on the ICE exchange cut bullish bets for the first time since early March, ending the previous nine consecutive week growth, amid potential profit-taking activities following the EU-UK ETS linkage deal, according to the latest COT data as of 23 May.
- 2024 EU ETS TNAC Preview – BNEF and Reuters forecasted that the EU ETS TNAC in 2024 will be at 1,013mn and 1,156mn respectively, versus the reported 1,112mn TNAC in 2023, according to their latest estimations.
- BNEF forecasts that the EUAs to average €73 in 2025, then steadily rise to €147 and €185 in 2030 and 2035 respectively, its latest model showed.
- EUAs aggregated open interest as of 27 May was nearing the highest level since DEC24 contract expiry, while the price rose almost 13% during the period, suggesting an overall bullish sentiment with stronger long positioning.
- The EU is currently on course to cut net emissions by around 54% by 2030 versus 1990 levels, nearing the 2030 target of a 55% reduction, according to the latest EC assessment.
- EU Climate Commissioner, Wopke Hoekstra praised the EU’s progress toward 2030 emissions targets and reinstated the importance of setting a clear 2040 target, according to the EC.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
TARIFFS: Bessent Touts "Substantial Movement" In Trade Talks
US Treasury Secretary Scott Bessent has issued a statement on social media touting "substantive movement" towards trade deals with India, South Korea, and Japan.
- Bessent: "We are continuing to make substantive movement on negotiations with many of our trading partners. The negotiations with our Asian trading partners are going very well; the negotiations with the Republic of Korea have gone very well; [Vice President JD Vance's] negotiations with India went very well; and I think we've had some very substantial negotiations with our Japanese allies."
- In an interview with CNBC earlier today, Bessent indicated that the Trump administration is working on a standardised template for trade deals, but declined to disclose further details.
- If progress is seen to be made, the template to facilitate further delays to the implementation of 'reciprocal tariffs', scheduled to take effect in July, as comprehensive bilateral trade deals can involve years of negotiations.
- Bloomberg reported earlier that South Korea's Vice Industry Minister Park Sung-taek said Seoul will send a delegation to Washington this week for “working-level talks to follow up on last week’s progress," but agreeing to any package of measures before the June 3 presidential election is “theoretically impossible.”
- Reuters reported that Japan's top trade negotiator Ryosei Akazawa said Tokyo's position 'has not changed' and Japan will continue to demand the full removal of US tariffs in a second round of negotiations scheduled for this week.
US 10YR FUTURE TECHS: (M5) Corrective Cycle Remains In Play
- RES 4: 113-04 76.4% retracement of the Apr 7 - 11 bear leg
- RES 3: 112-12 61.8% retracement of the Apr 7 - 11 bear leg
- RES 2: 111-25 50.0% retracement of the Apr 7 - 11 bear leg
- RES 1: 111-24 High Apr 28
- PRICE: 111-23+ @ 16:57 BST Apr 28
- SUP 1: 110-16+/109-08 Low Apr 22 / 11 and the bear trigger
- SUP 2: 108-26+ 76.4% retracement of the Jan 13 - Apr 7 bull cycle
- SUP 3: 108-21 Low Feb 19
- SUP 4: 108-03+ Low Dec 12 ‘24 and a key support
Treasury futures are trading closer to their recent highs. Recent gains are considered corrective and resistance to watch is 111-25, 50.0% of the Apr 7 - 11 bear leg sell-off. Clearance of this level would undermine the bearish theme, and open 112.12, the 61.8% retracement point. On the downside, a resumption of weakness would refocus attention on 109-08, the Apr 11 low and the bear trigger. Clearance of this level would resume the downtrend.
US TSYS/SUPPLY: Quarterly Financing Estimates: Wide Range For Borrowing (3/3)
Some sell-side expectations for today's financing estimates are below, from lowest-to-highest marketable borrowing requirement for the current quarter (where stated) - as we note, these expectations are somewhat wide in part due to differing TGA assumptions:
- TD Securities: End-June TGA cash estimate lowered to $650B (from $850B), borrowing estimate ~$300B.
- Wrightson ICAP: $480B market borrowing Apr-Jun, $570 Jul-Sep ($850B end-quarter TGA assumed).
- Deutsche: $507B borrowing requirement in current quarter, $480B next quarter. Cash targets unchanged at $850B.
- Goldman Sachs: $750B borrowing requirement in current quarter assuming $850B TGA; $875B next quarter (also $850B TGA).
- UBS: “don’t expect any change, but it is possible that they might lower their standard cash target from $800-850bn to as low as $500bn”.
- Wells Fargo: Assumes $850B quarter-end TGAs.
