EMISSIONS: EUAs/UKAs Hit Record Highs
EUAs Dec25 are rising to the highest level since mid-Feb, up over 3% w/w, on EU gas gains following heightened Middle East tensions, with the EUA-TTF correlation remained high, while lower-than-expected EU Industrial Production limiting carbon gains. UKAs Dec25 are rising to near the highest level since Oct 2023, up nearly 8% w/w amid influence from both EUAs and gas gains, while bullish sentiment continues.
- EUA DEC 25 up 0.61% at 75.85 EUR/t CO2e
- UKA DEC 25 up 0.89% at 54.4 GBP/t CO2e
- TTF Gas JUL 25 up 5% at 37.995 EUR/MWh
- NBP Gas JUL 25 up 5.8% at 89.8 GBp/therm
- Estoxx 50 down 1.1% at 5300
- FTSE 100 JUN 25 down 0.3% at 8858.5
- TTF has extended its move higher after the major escalation in Middle East tensions/conflicts, disruption to Israeli gas production, unplanned Norway supply outage and continued French nuclear corrosion risks.
- The latest Germany EU ETS CAP3 auction cleared at €75.36/ton CO2e, up 4.23% compared with the previous Germany auction at €72.3/ton CO2e according to EEX.
- EUA Dec25 implied volatility as of 12 June fell to its lowest level since 10 March while EUAs Dec25 rose nearly 4% w/w as of 12 June, suggesting a bullish sentiment while participants are expecting weaker disruptions in the short-term.
- Carbon capture and storage (CCS) is projected to capture 15% of CO2 emissions from ships globally by 2050, according to DNV.
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GERMANY: Merz' Government Declaration Started
Merz so far mostly talking about the Ukraine conflict and Germany's role in Europe in his government declaration.
- Assured a more active German role bringing forward common European goals, and mentioned he will make every effort to "achieve the greatest possible unity" between European and American partners. He announced a new voluntary military service - so far nothing unexpected.
- More concrete measures, especially on domestic economic policy, likely to come - for details, see 'GERMANY: Merz To Hold First Government Declaration at 12:00 BST / 13:00 CEST' - 10:35 GMT.
US TSYS: Early SOFR/Treasury Option Roundup
Overnight SOFR options leaned toward downside put structures on lighter volumes, Treasury options more paired as underlying futures scale off late overnight highs. Projected rate cut pricing holds steady to mildly softer vs. late Tuesday levels (*) as follows: Jun'25 steady at -2.1bp, Jul'25 steady at -9.8bp, Sep'25 steady at -24.7bp, Oct'25 steady at -37.3bp, Dec'25 at -52.9bp.
- SOFR Options:
- -4,000 SFRZ5 95.75/96.00 put spds, 9
- 3,000 SFRV5 95.62/95.81/95.87 put trees ref 96.205
- Block, 2,500 SFRM5 95.75/95.81/95.93/96.00 put condors, 0.25 ref 95.705
- -4,000 SFRU5 96.25/96.75 call spds, 4.5 ref 95.94
- 4,000 OQK5 96.62/96.87 2x1 put spds ref 96.53
- Treasury Options:
- +1,000 TYM5 110.25/110.75/111.25 2x3x1 call flys, 16
- -2,000 TYM5 110.25 straddles, 53
- -7,500 TYM5 109.5 puts, 11
- 4,200 FVM5 108.75 calls, 2 last
- 3,200 FVM5 107.5 puts, 18 last
- -1,250 FVM5 107.5/107.75/108.25 broken put flys, 15 vs. 107-19.5/0.05%
- +1,000 FVM5 108.25/108.75 call spds, 3.5
CROSS ASSET: Bonds Assess Uptick In Equities & Downtick In Crude
Modest downticks in core global FI markets as NASDAQ 100 e-minis hit fresh session highs.
- A downtick in oil has provided some insulation from the uptick in equities seen over the last ~90 minutes, helping core global FI markets to hold away from worst levels of the session.
