RENEWABLES: EU Mid-Day Power Summary: German, Italian, UK Front-Months Climb
May-07 11:38
German and Italian front-month power prices are rising to track price increases in both the TTF and EU ETS markets, while gains in the UK equivalent are also evident due to similar increases in NBP and UK emissions.
- UK Base Power June 25 (BFV) up 1.4% at 77.58 GBP/MWh
- France Base Power JUN 25 down 3.5% at 24.55 EUR/MWh
- Germany Base Power JUN 25 up 1% at 74.82 EUR/MWh
- EUA DEC 25 up 1.8% at 70.5 EUR/MT
- TTF Gas JUN 25 up 1.4% at 35.22 EUR/MWh
- Rotterdam Coal JUN 25 up 1.3% at 101.95 USD/MT
- TTF is edging higher amidst supply risks from Norwegian maintenance as well as lower than average feedgas to US LNG terminals despite some recovery today.
- EUAs Dec25 are rising and returning the €70 level since late April, tracking EU gas rally, with the intraday correlation between EUAs and TTF hit the height in the morning.
- Investment Funds positioning in ICE German power futures reduced their net short positioning to the lowest since 27 December 2024.
- Spanish hydropower reserves last week - calendar week 18 – increased by 0.6 percentage points to 77% of capacity, marking the tenth consecutive increase and a new 2025 high.
- Italian hydropower reserves last week – calendar week 18 – increased for the fifth consecutive week by 0.1TWh to 2.4TWh, while retaining a surplus to the five-year average.
- Greece faces a growing challenge in balancing its expanding renewable energy with grid stability, as solar and wind output often exceeds demand, increasing blackout risks.
- Google and Shell have signed a PPA for the delivery of electricity from the 108MW NordzeeWind offshore wind farm in the Netherlands.
- Construction of the 1.2GW EDU II nuclear project in the Czech Republic will be delayed by “several months” after a court temporarily blocked the signing of a reactor contract.
- Croatia and the US have discussed a potential cooperation in the development of nuclear energy in Croatia with particular focus on SMRs.
- EEX European power markets in April achieved 825.87TWh in traded volumes, marking a 14% year-on-year increase, driven by significant gains in Italian, UK and CSEE volumes
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US TSYS: Early SOFR/Treasury Option Roundup
Apr-07 11:37
Option volumes off last week's frenetic pace, SOFR outpacing Treasury options so far. Trading desks note a pick-up in puts as tariff-tied rally in underlying futures stalls -- curves twist steeper (2s10s +7.346 at 40.965 vs 45.006 overnight high) with bonds trading lower. Projected rate cuts through mid-2025 have rebounded overnight, near last week's highs with first full 25bp cut still priced in for June and over a full point by year end. Current levels vs. late Friday (*) as follows: May'25 at -13.1bp (-8.6bp), Jun'25 at -35.3bp (-31.5bp), Jul'25 at -60.6bp (-56.1bp), Sep'25 -80.4bp (-75.8bp).
- SOFR Options:
- Block 3,000 SFRU5 96.12/96.50 3x2 put spds 27.0 ref 96.52
- 1,500 0QK5 97.50/98.00 call spds vs. 0QM5 98.00 calls
- 12,750 SFRM5 95.62/95.75 put spds ref 96.13
- Block/screen, 20,000 SFRK5 95.68/95.93/96.18 call flys, 9.0-9.5
- 3,000 SFRK5 95.50/95.62/95.75 put flys ref 96.175
- 3,000 SFRM5 96.50/97.00/97.50 call flys ref 96.195
- 2,500 0QK5/0QM5 98.00 call spds, 2.0 ref 97.07
- 2,000 SFRZ5 95.87/96.37 call spds ref 96.885
- 1,500 SFRZ5/SFRH6 99.50 call spds
- over 9,100 0QJ5 97.50/98.00 call spds ref 97.115 to -.105
- Treasury Options:
- 3,000 TYM5 109/110/112 broken put flys ref 113-04 to -03.5
- 2,800 TYK5 111 puts, 8 ref 113-15.5
OUTLOOK: Price Signal Summary - Key Resistance In Bunds Remains Exposed
Apr-07 11:28
- In the FI space, a bull cycle in Bund futures remains in play and the contract is holding on to the bulk of its recent gains. Fresh short-term cycle highs last week signal scope for a continuation of the uptrend. The contract has cleared 131.14, the 76.4% retracement of the Feb 28 - Mar 11 bear leg. Clearance of this level strengthens the bullish condition and opens 132.56, the Feb 28 high. Initial firm support to watch lies at 129.02, the 20-day EMA.
- Gilt futures maintain a firmer tone despite today’s pullback. A key resistance at 93.79, the Mar 4 high, has recently been cleared and this has been followed by a move through the 94.00 handle. The breach signals scope for a climb towards 94.75, 76.4% of the Dec 3 - Jan 13 bear leg (cont). On the downside, initial support lies at 93.01, the Mar 20 high. A firmer support is seen at 92.13, the 20-day EMA.
GBP: Starmer Actions Add to Case For GBP Underperformance Through Tariffs
Apr-07 11:18
As markets consider the EU's retaliatory steps against the US, news this morning affirms that the UK are unlikely to meaningfully push back against US measures - an outcome that adds to the case for GBP underperformance through tariff uncertainty.
- UK PM Starmer announced that the "world has fundamentally changed" and has formally diluted electric vehicle targets for UK car production as well as potentially suggesting fiscal rules could be tweaked to combat an expected lower rate of growth. These policy actions stop well short of the Canadian, Chinese or likely EU response of counter-tariffs and restrictions - all of which carry an inflationary impulse.
- The contrasting official responses expose GBP here, suggesting inflationary pressure from UK countermeasures is low relative to the EU, and the argument for greater government support for businesses is more contained - leaving BoE pricing more subject to easing relative to the ECB.
- We noted above that EURGBP has cleared resistance to open 0.8645 and 0.8768 - meanwhile GBP/USD is meeting the 200-dma at typing (1.2813), to target 1.2784 and 1.2654, the 50% retracement for the YTD rally.
