EMISSIONS: EU End-Of-Day Carbon Summary: EUAs/UKAs Fall On EU Gas Losses

May-22 15:07

EUAs/UKAs Dec25 are trending down on the day, tracking EU gas losses, with the EUA-TTF intraday correlation hitting the height at 0.74 in the afternoon. Meanwhile, both EUAs/UKAs have loosened the correlation with equity markets to the lowest level since late March, suggesting the influence from global equities is gradually weakening as the tension on the US tariff eased off.

  • EUA DEC 25 down 0.3% at 72.52 EUR/t CO2e
  • UKA DEC 25 down 2.74% at 53.32 GBP/t CO2e
  • TTF Gas JUN 25 down 0.4% at 36.475 EUR/MWh
  • NBP Gas JUN 25 down 1% at 87 GBp/therm
  • Estoxx 50 down 0.7% at 5422
  • Correlation between EUA/TTF for 30-day period remained at similar level at 0.54.
  • Correlation between EUA/STOXX for 30-day period loosened to the lowest level since early April at 0.27.
  • Correlation between EUA/UKA for 30-day period remained at similar level at 0.55.
  • Correlation between UKA/FTSE100 for 30-day period loosened to the lowest level since early April at 0.36.
  • The EUA Dec25 premium to the UK equivalent widened to €9.38/t CO2e from the €7.83/t CO2e in the previous day, amid stronger UKAs losses.
  • The latest EU ETS CAP3 auction cleared at €71.84/ton CO2e, up 1.63% compared with the previous EU auction at €70.69/ton CO2e according to EEX.
  • EUAs auctions with the lowest weekly volume year-to-date will be held next week due to holiday.
  • TTF has reversed earlier gains as Norwegian supply gradually returns from a peak outage yesterday. Supply risks remain in focus with storage injection rates below normal amid a drop in NE Europe LNG imports and Malaysian LNG maintenance.
  • EUA Dec25 implied volatility as of 21 May fell to its lowest level since 2 April while EUAs Dec25 rose over 3% in the week, suggesting the market was more confident in the bullish outlook while expecting weaker disruptions in the short-term.
  • The correlation between German front-month power futures and EUAs has tightened in this month to the highest in almost one year, amid improved gas-to-coal fuel-switching dynamics.
  • The EU Parliament has voted in favour of exempting small importer from the bloc CBAM, easing compliance obligation for around 90% of importers while still covering 99% of targeted emissions, it said.

Historical bullets

EQUITIES: Stocks Erase Monday Slippage, Earnings in Focus

Apr-22 15:04

The uptick in US equities following the opening bell persists here, with the e-mini S&P now more than erasing the late sell-off across Monday trade. Consumer discretionary and utilities names are leading the bounce, supported by corporate earnings: 3M and General Electric are among the S&P 500's top performers on the back of their pre-market reports, while Tesla is higher by near 4% ahead of their after-hours report.

  • No specific headlines or newsflow to trigger the sharp recovery in stocks here, but markets may be fading the concerns surrounding both Fed independence and the policy cycle across the second half of this year.
  • Trade remains a key focus for markets - negotiation teams from South Korea, India and Thailand are due in Washington this week, leaving markets on watch for confirmation of any progress from the Oval Office.
  • Tesla are due after-market, with Boeing, Alphabet, P&G and Philip Morris due later this week: https://media.marketnews.com/MNIUSEARNINGS_210425_3ed710b2f3.pdf

 

BELGIUM AUCTION PREVIEW: On offer next week

Apr-22 15:02

Belgium has announced it will be looking to sell the following OLOs / Green OLO at its auction next Monday, April 28:

  • the 2.85% Oct-34 OLO (ISIN: BE0000360694)
  • the 3.10% Jun-35 OLO (ISIN: BE0000363722)
  • the 2.75% Apr-39 Green OLO (ISIN: BE0000356650)

EURIBOR OPTIONS: Z5 and H6 Put Structures

Apr-22 14:59

Recent Euribor flow of note:

  • ERH6 98.4375/98.125 1x2 put spread, paper pays 2.25 in 9.5k
  • ERZ5 98.3125/98.0625 put spread, paper sells for 8 in 15k