EMISSIONS: EUAs/UKAs Fall on EU Gas Losses
Mar-12 12:25
EUA Dec25 is trending downward steadily alongside TTF losses amid progress on Ukraine ceasefire proposal. Meanwhile, UKA Dec25 is also steadily declining due to EUAs influence and low trading activity.
- EUA DEC 25 down 1.2% at 67.45 EUR/t CO2e
- UKA DEC 25 down 0.5% at 38.32 GBP/t CO2e
- TTF Gas APR 25 down 2.6% at 41.61 EUR/MWh
- NBP Gas APR 25 down 2.7% at 102.45 GBp/therm
- Estoxx 50 up 1.5% at 5386
- TTF front month is softer on the day on signs of progress towards a Ukraine peace agreement. Colder weather this week remains a supportive factor, along with small outages at Norwegian gas fields.
- EUA Dec25 total traded volume before noon is at 11,370 contracts, 20% lower than the 10-day moving average of 14,665 during the same timeframe, suggesting a potential falling interest from participants in the remaining trading hours today.
- UKA Dec25 total traded volume before noon is at 353 contracts, nearly half of the 10-day moving average of 671 during the same timeframe, suggesting a potential falling interest from participants in the remaining trading hours today.
- Funds positioning in EU ETS futures on the ICE exchange turned more bearish for the fourth consecutive week with net long positionings holding at the lowest since 19 January, the latest COT data as of 7 March showed.
- Funds positioning in UK ETS futures on the ICE exchange turned more bearish for the second consecutive week, the latest COT data as of 7 March showed.
- Five carbon-intensive sectors, including iron and steel, cement, chemicals, mining, and oil and gas, account for 29% of global emissions, according to the latest joint report by ABB and Fraunhofer IPA.
- Companies that issued green bonds have cut emissions by more than 10% and reduced emissions intensity per revenue unit by 30% over four years, according to the Bank for International Settlements (BIS) latest report.
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EUROPE: German Economy Minister Reiterates Stance on Counter Tariffs
Feb-10 12:24
- "GERMAN ECONOMY MINISTER HABECK: EUROPE MUST RESPOND TO TRADE RESTRICTIONS, WE ARE PREPARED FOR THIS" (RTRS)
- Worth noting nothing new on that Habeck headline, after stating last week that if Europe cannot convince President Trump, "then Europe will have to react as Canada and Mexico are prepared to do: with counter-tariffs".
- Perhaps separately, EURUSD has extended its pullback in the last few minutes to 1.0310 from the earlier 1.0337 highs in early European trade, amid a notable bid filtering through for the broader greenback. 1.0272, the Feb 04 low is the immediate support level of note.
OUTLOOK: Price Signal Summary - Bull Cycle In Bunds Remains In Play
Feb-10 12:12
- In the FI space, Bund futures remain in a bull cycle and the contract is holding on to its latest gains. The recent pause appears to be a flag formation - a bullish continuation signal. Price has recently cleared both the 20- and 50-day EMAs. The break higher confirms a resumption of the corrective bull cycle that started Jan 14. Sights are on 133.73, 50.0% of the Dec 2 - Jan 14 bear leg. First support is at 132.53, the 20-day EMA.
- A bull cycle in Gilt futures remains in play for now, signalling scope for a continuation higher near-term. Last week’s extension has reinforced current conditions. The contract has traded through 93.09, the Dec 20 high, and breached 93.64, the 61.8% retracement of the Dec 3 - Jan 13 bear leg. Sights are on the 94.75, the 76.4% retracement. Initial firm support lies at 92.50, the 20-day EMA.
UK: Week Ahead
Feb-10 12:10
- The week ahead sees speeches from Catherine Mann (possibly the key event of the week) on “Economic prospects” tomorrow – see full preview earlier. There will also be a speech from Governor Bailey on “Are we underestimating changes in financial markets” tomorrow – that will be watched but he may not address monetary policy directly.
- Megan Greene will follow up with a speech on Wednesday at the Institute of Directors. With Mann having switched sides, it is thought that either Greene or Pill remains as the most hawkish member of the MPC. Both have voted for cuts in both November and February and Greene’s speech will be watched for any evolution of her views – although without a notable change in stance at present it seems unlikely her vote is likely to be the one to bring about a potential sequential cut, so if she maintains a hawkish tone it’s unlikely to impact market pricing too much.
- On the data front, we have seen the KPMG-REC survey point to more subdued conditions in the labour market (it was released overnight – see our summary at 00:01GMT). Tonight will see BRC retail sales released, with the first print of Q4 GDP due on Thursday, alongside monthly activity data for December. Consensus expects monthly GDP to rise 0.1% M/M following a disappointing 0.1% in Nov and -0.1% in Oct. On a quarterly basis consensus expects GDP to fall -0.1%, in line with the BOE's latest projection. However, unless we see downward revisions to earlier months, the monthly and quarterly consensus numbers don’t add up. Assuming no revisions to November and October monthly data, we would need a December GDP print in the range of -0.23% and 0.07% M/M for a Q4 GDP at -0.1% Q/Q. Consensus currently looks for 0.1%M/M – so only a very soft 0.1%M/M print is consistent with the quarterly print. Note that, a monthly print between 0.07% and 0.37% would result in a flat Q/Q GDP print, while a print above 0.37% M/M would get a Q4 quarterly reading of 0.1% Q/Q or higher. Looking ahead, GDP growth is expected to remain sluggish, with the BOE projection for 2025 being downgraded to 0.75%.
