EMISSIONS: EU End-Of-Day Carbon Summary: UKAs Fall To Two-Week Low
EUAs Dec25 are trading sideways on the day as the market struggles to find clear direction. The open interest in EUAs Dec25 has increased marginally by 0.22% over the past week, while the price has declined by over 4%, suggesting a bearish sentiment as rising short positioning outweighed long liquidation. Meanwhile, UKAs Dec25 are edging down to a two-week low amid sustained bearish sentiment, as rising open interest alongside a nearly 7% weekly price drop signals increased short positioning.
- EUA DEC 25 up 0.33% at 73.21 EUR/t CO2e
- UKA DEC 25 down 0.39% at 50.8 GBP/t CO2e
- TTF Gas JUL 25 down 1.3% at 40.4 EUR/MWh
- NBP Gas JUL 25 down 1.1% at 95.17 GBp/therm
- Estoxx 50 up 1% at 5249.52
- Correlation between EUA/TTF for 30-day period at 0.32.
- Correlation between EUA/STOXX for 30-day period at 0.19.
- Correlation between EUA/UKA for 30-day period at 0.44.
- Correlation between UKA/FTSE100 for 30-day period at 0.33.
- The EUA Dec25 premium to the UK equivalent remained at a similar level at €13.83/t CO2e.
- TTF front month has pulled back following an initial spike to a high of €42.44/MWh after the US struck Iranian nuclear facilities although eased back with much of the risk premium already priced in.
- The latest EU ETS CAP3 auction cleared at €72/ton CO2e, down 2.01% compared with the previous EU auction at €73.48/ton CO2e according to EEX.
- EUAs June25 Option Expiry – Wed June 25 – A total of 90.8k of open ICE EUAs June 25 options contracts are currently due to expire on Wed 25 June, down compared with the 92.5k on last Thursday. Put/call open interest ratio is at 1.08, with 43.6k call contracts, down from 44.5k on last Thursday, and 47.2k puts, down from 48k.
- Germany plans to double urban development funding, preparing for the upcoming EU ETS 2 set to start in 2027, Buildings Minister Verena Hubertz told Clean Energy Wire.
- The UK government has unveiled its Clean Energy Industries Sector Plan, reaffirming commitments to the EU-UK ETS linkage, CCUS investment, and CO2 transport regulations, though no new announcements were made.
- PGE Group, Poland’s largest electricity producer, has unveiled a €55bn strategy aiming to cut CO2 emissions by 75% by 2035 and achieve climate neutrality by 2050, its CEO told Politico.
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JGB TECHS: (M5) Rallies off Lows
- RES 3: 147.74 - High Jan 15 and bull trigger (cont)
- RES 2: 146.53 - High Aug 6
- RES 1: 141.48/142.95 - High May 2 / High Apr 7
- PRICE: 139.40 @ 15:42 GMT May 23
- SUP 1: 138.54 - Low May 22
- SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
- SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
JGBs have rallied off recent lows and for now, however a bearish theme remains intact following the reversal that started Apr 7. A continuation lower would signal scope for an extension towards 136.57, a Fibonacci projection. On the upside, a reversal higher would instead refocus attention on 142.95, the Apr 7 high. The first important resistance to watch is 141.48, the May 2 high. A break of this level would be viewed as an early bullish signal.
US FISCAL: Total Tariff Income Jumping In May As New Rates Hit
Treasury reported a record $16.5B in customs/excise taxes on May 22, reflecting the large increase in tariff rates that went into effect in April.
- Today's report is important because it represents the largest tariff collections of the month which are typically on a due date around the 22nd, when most corporate importers make their payments.
- Thursday's one-day collection is a record, and the month has already set a new record. Tariff revenues have totaled $22.3B so far in May, and are came in at $17.4B in April (after averaging $8.1B/month in 2024).
- For the fiscal year as a whole so far, customs duties have totaled just under $93B, per the Treasury Daily Statement.
US FISCAL: Extraordinary Measures Continue To Dissipate Alongside Treasury Cash
Treasury's latest estimate of the size of "extraordinary measures" available to use "in order to prevent the United States from defaulting on its obligations as Congress deliberate[s] on increasing the debt limit" is down to $67B on May 21 (of an available $299B), vs $82B a week earlier.
- The amount hit the 2nd lowest level since the debt limit impasse started, at $46B, on May 20 (the low was $34B on Feb 24).
- With $476B in cash in the Treasury General Account on May 21, that left the total resources available to Treasury at $543B, the least since April 14 - the day before the annual April 15 tax deadline.
- Treasury Sec Bessent warned Congress earlier this month that "there is a reasonable probability that the federal government's cash and extraordinary measures will be exhausted in August while Congress is scheduled to be in recess. Therefore, I respectfully urge Congress to increase or suspend the debt limit by mid-July".
