EMISSIONS: EU End-Of-Day Carbon Summary: EUAs/UKAs Rise On Mix Influences
Oct-01 15:18
{EU}{EUAs/UKAs Dec25 are edging up amid volatility from post-surrender seasonality, EU gas and equities. The intraday swing in EUAs reached its widest level since late July at 2.75% and exceeded the average intraday range.
- EUA DEC 25 up 0.74% at 76.28 EUR/t CO2e
- UKA DEC 25 up 0.63% at 54.4 GBP/t CO2e
- TTF Gas NOV 25 down 0% at 31.4 EUR/MWh
- NBP Gas NOV 25 down 0.5% at 80.15 GBp/therm
- Estoxx 50 up 0.9% at 5580.72
- The latest bi-weekly Poland ETS CAP3 auction cleared at €74.3/ton CO2e, down 4.17% compared with the previous bi-weekly Poland auction at €77.53/ton CO2e according to EEX.
- UKA ICE auction cleared at £53.50/ton CO2e, compared with £57.25/ton CO2e in the previous auction on 17 Sept, according to ICE.
- Bullish conditions in ICE EUA futures remain intact and the latest pullback appears corrective - for now. A fresh cycle high on Sep 17 confirmed a resumption of the uptrend and an extension of the bullish price sequence of higher highs and higher lows. Scope is seen for a move towards €78.73, a Fibonacci retracement. First key support to watch is €74.37, the 50-day EMA. A clear break of this average would signal scope for a deeper retracement.
- The average and median historical performance for EUAs front-December futures in the next session following the surrender deadline have shown declines of 1.15% and 1.56% respectively since 2015.
- EUA POSITIONING – EU ETS futures on the ICE exchange in the week to 26 September, after increasing positions for five consecutive weeks according to the latest CoT data.
- UKA POSITIONING – Investment funds raised net long positions in UK ETS futures on the ICE exchange to an all-time high as of 26 September, according to the latest CoT data.
- TTF front month is slightly lower, facing continued pressure amid healthy LNG imports and Norwegian supplies.
- Germany, France, and Italy have jointly called on the EU Commission to reinforce stability in the EU ETS on 29 Sep, proposing changes to its architecture to better manage price volatility, according to the joint declaration.
- Germany’s Social Democrats (SPD) are pushing back against Chancellor Friedrich Merz’s plan to overturn the EU’s 2035 ban on new petrol and diesel vehicles, warning that reversing the phase-out could undermine long-term competitiveness, reported by dpa-AFX on 28 Sep.
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GILTS: Steepening Intact Even With Yields Off Highs
Sep-01 14:48
Gilts have taken cues from wider core global FI markets for much of the day.
- Slightly softer-than-flash final manufacturing PMI data did little for the market, but probably meant that early London lows were not re-tested. Futures last -19 at 90.33.
- The contract breached initial support (90.22), basing at 90.20, but leaving key support at late May lows (90.11) untested.
- Bears remain in technical control.
- Yields are 1.0-2.5bp higher. Curve bear steepens.
- 5s30s is on track for its first close above 150bp in the current cycle. Next upside level is the Feb ’17 high (152.63bp).
- Little change in the very front end of the GBP STIR strip on the day, with SONIA futures +0.5 to -3.5, twist steepening. August lows untested.
- BoE-dated OIS is steady, showing ~9bp of cuts through year-end. We think the November meeting is much more “live” than the 4bp currently discounted by markets.
- Fiscal risks remain front and centre in the UK. Today’s headlines have focused on operational adjustments within the government, with source reports playing down the likelihood of an impending cabinet reshuffle.
- A reminder that the DMO will introduce the new 4.75% Oct-35 gilt via syndication this week. That could come as soon as tomorrow.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Sep-25 | 3.973 | +0.5 |
Nov-25 | 3.925 | -4.2 |
Dec-25 | 3.874 | -9.3 |
Feb-26 | 3.777 | -19.1 |
Mar-26 | 3.739 | -22.9 |
Apr-26 | 3.672 | -29.5 |
SEK: Most notable move in EURSEK
Sep-01 13:50
- Today is the most notable single move in the EURSEK in a Month, since 1st August ~9 big figures range.
- For now the cross seems to be finding some support at the Psychological 11.0000 level.
- The early chart to watch was the USDSEK, now close to testing the 2025 low.
EGBS: Limited Benefit To Bunds From OAT Weakness
Sep-01 13:44
Goldman Sachs note that “although French assets have been under pressure, spillovers to the rest of Europe - and to EGBs in particular – have been contained. Ongoing declines in rates volatility help to contain risks to other sovereign spread markets. And there has been limited richening in Bunds vs. swaps compared to last year’s snap elections”.
- They provide two possible explanations:
- “Uncertainty in France has not reached the same level as last year, with parliamentary elections likely not yet widely expected and less speculation about President Macron resigning. In the same vein, markets may be drawing some comfort from having witnessed the relatively smooth transition from the Barnier to the Bayrou government last November”.
- “With the ECB cutting cycle now over, German fiscal easing underway, and a more challenging duration backdrop globally, the prospect of substantial Bund outperformance is dimmer”.
- Ultimately, Goldman continue to “expect Bunds to cheapen, both in outright terms and against swaps. That said, to the extent that we expect the cheapening in Bunds vs. swaps to be gradual, the increased tail risk in France and lack of reaction in swap spreads so far diminish the risk reward for tighteners, in our view”.
