POWER: EU Midday Power Summary: FR-DE April Discount Narrows
Feb-28 12:16
The French-Germany April power contract discount has narrowed to its lowest level since 26 February as losses in the EU ETS market have capped German gains from slightly elevated TTF costs. The Nordic 2Q25 is still trading in green amid planned works at several nuclear plants over the period, with gains in Germany supportive.
- Nordic Base Power 2Q25 up 1.4% at 21.40 EUR/MWh
- France Base Power APR 25 up 1.6% at 57.5 EUR/MWh
- Germany Base Power APR 25 up 0.3% at 79.62 EUR/MWh
- EUA DEC 25 down 0.6% at 72.35 EUR/MT
- TTF Gas APR 25 up 0.3% at 45.27 EUR/MWh
- Rotterdam Coal MAR 25 down 0.1% at 92.55 USD/MT
- TTF front-month prices have given back most of their gains from the early morning as refill supply risks are set against warmer weather into March reducing demand and easing pressure on storage withdrawals.
- EU ETS prices remain in red territory amid windier and warmer weather in NW Europe heading into next week. Additional downward pressure has been placed as TTF has given back most of its gains.
- The latest weekly German EUA CAP3 auction cleared lower at €70.65/ton CO2e, compared with €73.01/ton CO2e in the previous auction a week ago.
- The UK introduced a new rule that operators must surrender their free allowances if installations cease operations.
- Siemens Energy has signed an exclusive agreement to supply steam turbines, generators, and auxiliary systems for Rolls-Royce's Generation 3+ SMRs.
- Italy’s cabinet on Friday adopted a new legal framework to revive nuclear power.
- Italian Terna’s main capacity auction for the 2027 delivery year resulted in total contracted volumes of 38.64GW, with all volumes contracted at €47,000/MW/yr.
- Italy’s Fer X transitory decree is set to come into force on 28 February, with the mechanism supporting the construction of renewables, like solar, wind, and hydro.
- Amazon has entered an 870MW PPA with Iberdrola for 17 renewable projects across Spain and Portugal.
- France and Morocco are considering connecting power countries with a new power interconnector.
- Serbian TSO Elektromreža Srbije has received its first two grid connection applications for two BESS projects.
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OUTLOOK: Price Signal Summary - Bull Cycle In Bunds Remains In Play
Jan-29 12:13
- In the FI space, Bund futures are trading below their recent highs. The pullback appears corrective and a S/T bull cycle is in play. The Jan 15 rally highlighted a reversal signal - a bullish engulfing candle. It continues to suggest scope for a corrective phase that is allowing an oversold trend condition to unwind. Sights are on 132.04, the 20-day EMA. A clear breach of the average would strengthen the bullish theme. The bear trigger is 130.28, the Jan 15 low. Initial support lies at 131.00, the Jan 16 / 24 low.
- The medium-term trend condition in Gilt futures is unchanged, it remains bearish. However, recent gains continue to highlight a corrective phase and signal scope for a continuation higher near-term. The contract has traded through the 20-day EMA and the focus is on 92.75, the 50.0% retracement of the Dec 3 - Jan 13 bear leg. Initial support is at 91.10, the Jan 20 low.
SPAIN DATA: Unit Profits Fall Offsets Strong Labour Cost Growth In Q4
Jan-29 12:11
The Spanish GDP deflator softened notably in Q4, with the flash release indicating growth of 2.3% Y/Y (vs 3.3% in Q3). Unit labour cost growth was strong at 4.0% Y/Y (vs 3.6% prior). However, this was offset by a 2.0% Y/Y fall in unit profits (vs growth of 2.6% prior).
- Unit labour costs contributed 1.9pp to annual deflator growth, while unit profits subtracted 0.8pp. Unit taxes and subsidies contributed the remaining 1.2pp.
- Looking a little closer at unit labour costs, compensation growth was strong at 7.6% Y/Y (vs 7.2% prior). While this was partially offset by an acceleration in hours worked (2.8% Y/Y vs 1.4% prior), real productivity per hour worked softened to 0.7% Y/Y (vs 2.1% prior).
- Information on the GDP deflator and labour productivity will not be available for other major Eurozone countries (or the region as a whole) until the final releases in late February/early March. The ECB expects moderating wage growth to ease labour cost pressures in 2025, while productivity growth is forecast to pickup owing to "the cyclical adjustment of the economy over the projection horizon and a slowdown in employment growth".
US DATA: New Purchase Mortgage Applications Resisting Higher Rates
Jan-29 12:10
- MBA composite mortgage applications dipped 2% last week (sa) after a flat week that consolidated a previous 33% jump at the start of the year.
- The latest decline was driven by refis (-6.8% after -2.9%) whilst new purchase applications only inched lower (-0.4% after 0.6%).
- New purchase applications stand at 63% of 2019 averages for some of their highest levels since mid-2023 vs just 30% for refis.
- The recent moves came as the regular 30Y mortgage rate held steady at 7.02%, broadly consolidating its recent rise to 7.09% for highs since Mar 2024.
