EMISSIONS: EUA/UKAs Rangebound on EU Gas Losses
Mar-24 16:36
EUAs/UKAs Dec25 are struggling to find a clear direction on Monday afternoon, moving in tandem EU gas prices. Meanwhile, EUA Mar25 implied volatility as of 21 March fell to the lowest level since 5 March, ahead of the 26 March expiry.
- EUA DEC 25 up 0.15% at 71.56 EUR/t CO2e
- UKA DEC 25 up 0.32% at 46.39 GBP/t CO2e
- TTF Gas APR 25 up 0.2% at 42.7 EUR/MWh
- NBP Gas APR 25 down 0% at 103.76 GBp/therm
- Estoxx 50 down 0.4% at 5427.19
- Correlation between EUA/TTF for 30-day period remained high at 0.63.
- Correlation between EUA/UKA for 30-day period remained high at 0.7.
- The EUA Dec25 premium to the UK equivalent narrowed to €16.09/t CO2e from the €16.17/t CO2e in the previous day, amid [...].
- The latest EU ETS CAP3 auction cleared at €69.85/ton CO2e, down 2.36% compared with the previous EU auction at €71.54/ton CO2e according to EEX.
- TTF front month reversed losses late in the session, though remains well below a high of €45.5/MWh last week with mild weather and a switch to the first net storage injection of the year weighing on prices. Focus remains on Ukraine peace negotiations.
- The latest EU ETS CAP3 auction cleared at €69.85/ton CO2e, down 2.36% compared with the previous EU auction at €71.54/ton CO2e according to EEX.
- The trend outlook in ICE EUA futures is bearish, however, the contract traded higher last week, marking an extension of the recovery that started Mar 7. Price has traded through both the 20- and 50-day EMAs, but has since pulled back. A clear break of the 50-day average, at €73.28, would undermine a bullish theme and expose €77.73, a Fibonacci retracement. A clear reversal would refocus attention on the bear trigger at €66.78, the Mar 7 low.
- EUA Mar25 implied volatility fell to 34.79% as of 21 March, the lowest level since 5 March, ahead of the 26 March expiry, indicating cheaper option premiums and calmer market expectations for price movements in the remaining days.
- Lord Offord of Garvel, Malcolm Ian Offord, will question the government on the impact of their plans to decarbonise the grid by 2030 on the UK’s energy security during today’s House of Lords meeting, starting at 2:30 PM GMT.
- Power sector emissions in the European Union declined by 10% on the year in 2024, due to lower fossil-fuel generation, the latest IEA Global Energy Review showed.
- For the first time in both the Netherlands and the EU, emissions allowances have been granted for a project focused on underground CO₂ storage, according to Porthos CO2 Transport & Storage.
- Finnish utility Fortum projected that power demand in the Nordics could double by 2050, driven by decarbonization efforts. It will explore new nuclear and pumped hydro projects as potential future solutions, Fortum CEO Markus Rauramo said in a statement.
- The European Commission has approved a €5 billion German state aid scheme aimed at helping companies within the EU ETS decarbonise their production processes, it announced.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
STIR: July Fed Cut Priced Back In
Feb-21 21:14
The next Fed rate cut is again fully priced for the July meeting, following a 6bp futures-implied move today on the back of soft Services PMI data exacerbated in the afternoon by a risk-off move in equities.
- This comes following a run of mixed-at-best data (retail sales, housing starts, various consumer and business surveys) in the last week and is the first time a July cut has been priced since Feb 7 (just prior to January payrolls data) - previously it was priced for September.
- There's now almost two rate cuts priced through the end of the year (47bp through the December FOMC, an increase of 9bp on the day), the most seen since Feb 5.
- For the week, implied 2025 rate cuts have ranged between 35 and 48bp (the latter seen in the last hour of trade)
- See our US Macro Weekly for more on what to watch next week, with PCE and GDP the data highlights.
| Meeting | Current FF Implieds (%), LH | Cumulative Change From Current Rate (bp) | Incremental Chg (bp) | Prior Session (Feb 20) | Chg Since Then (bp) | End of Last Week (Feb 14) |
| Mar 19 2025 | 4.32 | -1.5 | -1.5 | 4.32 | -0.9 | 4.32 |
| May 07 2025 | 4.25 | -8.4 | -6.9 | 4.28 | -3.1 | 4.28 |
| Jun 18 2025 | 4.14 | -19.4 | -11.0 | 4.18 | -4.2 | 4.18 |
| Jul 30 2025 | 4.07 | -26.2 | -6.8 | 4.13 | -6.0 | 4.13 |
| Sep 17 2025 | 3.97 | -35.7 | -9.5 | 4.04 | -6.5 | 4.04 |
| Oct 29 2025 | 3.92 | -41.2 | -5.5 | 4.00 | -8.0 | 3.99 |
| Dec 10 2025 | 3.86 | -47.3 | -6.1 | 3.95 | -8.8 | 3.93 |
US TSYS: Late Risk-Off Support Lends to Weak Data Support
Feb-21 20:29
- Treasuries look to finish near session highs Friday, second half support spurred by risk-off sentiment as wires recirculated report of a new Covid strain out of China with "pandemic potential" (SCMP).
- Tsy Mar'25 10Y futures climbed to 109-24 high (+18.5), still shy of initial technical resistance at 110-00 (High Feb 7 and the bull trigger); 10Y yield fell to 4.4042% low; curves mixed: 2s10s -1.123 at 22.205, 5s30s +.956 at 40.929. Heavy volumes (TYH over 3.3M tied to quarterly roll action, June takes lead next Friday).
- Early Treasury support triggered by weaker than expected data: flash S&P PMIs w/ composite at 50.4 (cons 53.2) after 52.7 in Jan, services (49.7 vs cons 53.0, after 52.9); and existing home sales were softer than expected in January at 4.08m (cons 4.13m) after an upward revised 4.29m (initial 4.24m). UofM data showed a worrying rise in long-term inflation expectations alongside a deterioration in consumer sentiment.
- US stocks fell hard, DJIA back to January 21 levels while SPX Eminis and Nasdaq withdrew to last Thursday lows. Trading desks also cited today's call weighted option expiration that has historically leaned toward bearish price action in the week after.
- Late weekend focus on German elections take focus over the weekend, before New Zealand retail sales and German IFO data cross. There is a public holiday in Japan Monday.
LOOK AHEAD: The Week Ahead: 2nd Q4 GDP and January PCE Reports
Feb-21 20:05
- The upcoming US economic calendar is backloaded, with the second release for Q4 national accounts on Thursday before the January PCE report on Friday. Real GDP growth is seen confirming what was at the time a softer than expected 2.3% annualized in Q4, whilst there will also be a first estimate for real GDI growth after 2.1% in Q3.
- Much of the relative GDP weakness in Q4 after two quarters averaging 3.0% came from a large drag from inventories. It should continue to show signs of robust domestic demand after personal consumption increased 4.2% annualized in the advance release.
- However, January’s monthly report is likely to show consumption got off to a much weaker start of 2025. Recall that retail sales were far weaker than expected in January as they slid -0.9% M/M (cons -0.2) along with an even larger miss for the control group at -0.8% M/M (cons 0.3) to more than unwind the previously strong 0.8% M/M increase in December. Early days for the Bloomberg consensus currently see real personal spending growth of -0.1% M/M in Jan after 0.4% in Dec.
- As for inflation, Governor Waller cited estimates for core PCE inflation of around 0.25% M/M and it likely rounding to 2.6% Y/Y with some help from modest upward revisions.
- Base effects will have helped it drop from the 2.8% Y/Y averaged in Q4 whilst recent run rates should look a little more favorable (2.1% and 2.4% annualized over three and six months assuming no revisions). Note that revisions will go back to Q4, reflecting the new seasonal adjustment factors for both CPI and PPI, but longer dated revisions will have to wait for the comprehensive national account revisions due in September.
