POWER: EU Mid-Day Power Summary: France March Power Plunges
France March power is trading at the lowest since 30 January, weighed on by forecasts for milder weather and sharp losses in EU gas prices. German front-month power is also pulling back, albeit at a slower pace. Nordic March power is also plunging with losses in EU gas, forecasts for warmer weather and an upward revision in the region’s hydro balances.
- Nordic Base Power MAR 25 down 10.3% at 40.7 EUR/MWh
- France Base Power MAR 25 down 7.3% at 83 EUR/MWh
- Germany Base Power MAR 25 down 6.1% at 100.37 EUR/MWh
- EUA DEC 25 down 2.7% at 78.11 EUR/t CO2e
- TTF Gas MAR 25 down 6.6% at 51.965 EUR/MWh
- TTF front month is extending the decline this week under pressure by the prospect of peace talks over the Ukraine war and as countries push for the EU to relax gas storage targets.
- EUAs 2025 are also pulling back with sharp losses in EU gas prices and warmer weather, while a rebound in EU equities is capping losses.
- The latest EU ETS CAP3 auction cleared lower at €76.77/ton CO2e, compared with €80.08/ton CO2e in the previous auction, while widening the discount to the futures contract.
- The UK government launched new investment, Clean Industry Bonus, providing financial support to offshore wind developers to invest in industrial, oil and gas communities.
- Joint Research Centre said that the GHG emissions trend for the six Western Balkans economies does not correspond to the emission reduction rate needed to reach the EU’s 2030 climate goals.
- French solar and renewable lobbies warn that government plans to cut subsidies for medium-sized projects could stall market growth and put thousands of jobs at risk.
- Planned maintenance at EdF’s 610MW Heysham nuclear reactor in the UK has been extended by six days until 25 March.
- Italian hydropower reserves last week declined by 0.15TWh to 2.48TWh to fall below the five-year average for the first time this year.
- Acer has decided not to implement long-term transmission rights (LTTRs) between the Netherlands and Norway (NO2), citing limited benefits and potentially higher costs for consumers.
- Estonia receives 17 bids for onshore wind areas, with state land leased for up to 40 years and the development procedures to be concluded in 1Q25.
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US: Hegseth Is First Trump Cabinet Nominee To Face Senate Scrutiny
Defense Secretary nominee, Pete Hegseth, will become the first of US President-elect Donald Trump’s Cabinet nominations to face Senate scrutiny when he appears before the Senate Armed Services Committee at 09:30 ET 14:30 GMT. LIVESTREAM
- Hegseth will receive a grilling from Democrats over personal misconduct allegations and a lack of managerial experience. Today's hearing will set the tone for upcoming hearings with other embattled nominees - Robert F. Kennedy Jr. (Health Secretary), Kash Patel (FBI Director), and Tulsi Gabbard (Director of National Intelligence) - who are yet to have hearings scheduled.
- Key panel Democrat Senator Mark Kelly (D-AZ) said: “I'm interested in hearing about how [Hegseth's] experience has prepared him for the job of managing 3 million people and an $850 billion a year budget,”
- According to prepared remarks, Hegseth will argue that US national security will be bolstered by “someone with dust on his boots [at] the helm” of the Department of Defense, pledging to give "new defense companies" a better chance to win contracts, and rapidly deploy emerging technologies.
- If the Armed Services Committee votes to discharge Hegseth’s nomination to the full Senate, he can drop three Republican votes and remain on track for confirmation without requiring Democrat support.
- Data from Polymarket shows Hegseth has weathered an initial wave of opposition, with an implied probability of 85% of Senate confirmation.
Figure 1: Trump’s Defense Secretary, % Implied Probability of Confirmation
Source: Polymarket
US TSY FUTURES: New lows for Tnotes, Yield levels are in Focus
- US Tnotes found some support at the 4.80% Mark Yesterday, and while the street wait on the US CPI Tomorrow, PPI Today, some desks will again be watching the 4.80% level, tested a 4.8026% high and a 107.06 low in TYH5.
Looking further out and in case of upside traction in Yield, most Investors will be eyeing the big 5% level:
- 4.8500% = 106.30.
- 4.9000% = 106.20.
- 4.9500% = 106.10.
- 5.0000% = 106.00+.
- 5.0187% = 105.28+ (2023 high and highest since July 07).
(Chart source: MNI/Bloomberg):
STIR: Short Setting Dominated In Most SOFR Futures On Monday
OI data suggests short setting dominated through the SOFR greens on Monday, with only limited pockets of net long cover seen in that area of the strip.
- Net long cover then became more prominent in the blues,
- Hawkish adjustments continued in the wake of Friday’s NFP release, with a bid in energy commodities adding further weight.
| 13-Jan-25 | 10-Jan-25 | Daily OI Change |
| Daily OI Change In Packs |
SFRZ4 | 1,087,770 | 1,098,794 | -11,024 | Whites | +48,958 |
SFRH5 | 1,198,588 | 1,184,367 | +14,221 | Reds | +85,777 |
SFRM5 | 1,065,028 | 1,030,324 | +34,704 | Greens | +32,256 |
SFRU5 | 821,991 | 810,934 | +11,057 | Blues | -11,195 |
SFRZ5 | 1,024,840 | 994,376 | +30,464 |
|
|
SFRH6 | 670,335 | 639,796 | +30,539 |
|
|
SFRM6 | 655,656 | 645,320 | +10,336 |
|
|
SFRU6 | 631,967 | 617,529 | +14,438 |
|
|
SFRZ6 | 751,998 | 734,804 | +17,194 |
|
|
SFRH7 | 493,360 | 483,230 | +10,130 |
|
|
SFRM7 | 401,384 | 392,266 | +9,118 |
|
|
SFRU7 | 287,516 | 291,702 | -4,186 |
|
|
SFRZ7 | 269,851 | 280,884 | -11,033 |
|
|
SFRH8 | 216,396 | 219,902 | -3,506 |
|
|
SFRM8 | 176,637 | 173,450 | +3,187 |
|
|
SFRU8 | 105,922 | 105,765 | +157 |
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