EMISSIONS: EU Mid-Day Carbon Summary: EUAs/UKAs Rise On EU Gas, Equities Gains

• In the FI space, Bund futures have pulled back from their latest highs. Recent gains have resulted in a break of resistance at 128.87, the Aug 28 high and a short-term bull trigger. The climb undermines a recent bearish theme and highlights a stronger reversal. Scope is seen for an extension towards 129.50, the Aug 5 high. Key support and the bear trigger has been defined at 127.61, the Sep 3 low. The latest pullback is - for now - considered corrective. First support lies at 128.25, the Sep 4 low.
• A bull cycle in Gilt futures remains in play - a recent rally highlights a stronger corrective cycle and the contract is holding on to its gains. Note that the move higher is allowing an oversold trend condition to unwind. Price has breached initial firm resistance at 90.84, the Aug 28 and 29 high. A continuation higher would signal scope for a climb towards 92.06, the Aug 14 high. On the downside, initial support lies at 90.65, the Sep 5 low.

Speaking to CNBC, Treasury Secretary Scott Bessent speaks on the future of the Fed. Says that regarding newly-confirmed Fed Board of Governors' member Stephen Miran that "the plan is for him to come back to the CEA [Council of Economic Advisors]". Asked about his interview with St. Louis Fed President Jim Bullard for the position of Fed chair, Bessent says that the two "had a good session" and that Bullard "knows the Fed well."

• Bessent says that "If President Trump thought inflation was a problem, he'd be willing to have rate hikes". Says he hopes the Fed "catches up" with the President, who thinks the Fed is "behind the curve". Bessent says that he expects to see inflation "starting to come down."
• Regarding the threat to tariffs from courts, Bessent says he is "confident the Supreme Court" will back the administration, adding there are "lots of other authorities we can use" to keep tariffs in place.
• On trade talks with China, Bessent says the talks "were done with great respect" and were "very fulsome". Says that China has a "long list of asks" but that Trump "made it clear he was willing to let Tik Tok go dark" and that the president would not sacrifice national security for a deal.
• Bessent says there is a framework in place for an agreement with China, and he expects a final deal could be agreed by Friday during a call between President Trump and his Chinese counterpart, Xi Jinping. 

• In FX, the trend theme in EURUSD remains bullish. Today’s gains have resulted in a climb above 1.1789, the Jul 24 high, exposing 1.1829, the Jul 01 high and bull trigger. Clearance of this hurdle would confirm a resumption of the primary uptrend. Support to watch is the 50-day EMA, at 1.1643. A clear breach of it would signal scope for a deeper retracement. First support lies at 1.1694, the 20-day EMA.
• A bullish theme in GBPUSD remains intact and price is trading higher this week. The pair has traded through resistance at 1.3595, the Aug 14 high and a bull trigger. The break strengthens bullish conditions and opens 1.3681 next, the Jul 4 high. Initial firm support to watch is 1.3480, the 50-day EMA.
• USDJPY continues to trade inside its range. Key short-term support to watch is 146.21, the Aug 14 low and a bear trigger. A break of this level would highlight a stronger bearish threat and highlight a range breakout. This would expose 145.40, 50% of the Apr - Aug upleg. On the upside, clearance of 149.14, the Sep 3 high is required to reinstate a bullish theme.