EMISSIONS: EUAs Recent Volatility Stand Below Equities, Gas
EUAs' Dec25 10-day historical volatility has been below TTF's since late May and declined below STOXX volatility for the first time since early April, with carbon being less sensitive toward recent heightened geopolitical risks due to mixed market sentiments within the carbon market that balanced out potential unilateral direction.
- EUAs Dec25 annualised 10-day historical volatility is at 18.89% today, below STOXX's of 19.46% and TTF’s of 83.14% respectively.
- During the 10-day period, EUAs have swung 4% while STOXX and TTF swung nearly 4% and 16% respectively.
- EUAs Dec25 futures contract open interest remained stable by rising only slightly over 1.5% over the past 10-days as of 23 June, while TTF July25 open interest has declined by nearly 19%.
- Meanwhile, the daily trading volume has mostly been above the 30-day average in the past 10 days, suggesting that the trading activities remained lively.
- EUAs Dec25 implied volatility has been oscillating between 31%-31.50% since early June, while TTF Jul25 has surged from 44% to 88.15% during the same period.
- The stable open interest, limited price movement and low volatility have suggested that, unlike the clear direction from TTF, carbon market participants were mixed on future expectations, thus, balancing out the potential price outbreaks.
- EUA DEC 25 up 0.59% at 73.7 EUR/t CO2e
- TTF Gas JUL 25 down 11.6% at 35.83 EUR/MWh
- Estoxx 50 up 1% at 5249.52
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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".
