POWER: French Day Ahead Clears at Discount to Germany
Day-ahead electricity prices in France and Germany declined, driven by reduced demand during the holiday season, which outweighed the impact of lower wind generation. France cleared at a discount to Germany, due to a slight boost in nuclear availability and a more pronounced drop in power consumption, which placed additional downward pressure on prices.
- The German day-ahead spot settled at €98.63/MWh from €102.49/MWh on the previous day.
- The French day-ahead spot cleared at €96.79/MWh from €102.49/MWh on the previous day.
- France flipped to a €1.84/MWh discount to Germany from being at parity in the previous session.
- Wind output in Germany is forecast to drop to 8.02GW, or a 12% load factor on Wednesday from 11.36GW, or an 18% load factor forecasted for Tuesday.
- Power demand in Germany is forecast to decrease to 50.49GW on Wednesday from 52.55GW on Tuesday amid the holidays.
- In contrast, Wind output in France is forecast to drop to 1.63GW or an 8% load factor on Wednesday from 2.86GW or 14% load factor forecasted for Tuesday.
- Power demand in France is forecast to fall to 52.83GW on Wednesday from 57.31GW on Tuesday.
- Nuclear availability in France rose to 84% of capacity as of Tuesday morning from 83% on Monday, RTE data showed, cited by Bloomberg.
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AUSSIE 3-YEAR TECHS: (Z4) Bearish Backdrop Building
- RES 3: 96.380 - High Mar 21 2023
- RES 2: 97.190 - High May 5 2023
- RES 1: 96.730/932 - High Sep 17 / 76.4% of Mar-Nov ‘23 bear leg
- PRICE: 95.920 @ 16:46 GMT Nov 21
- SUP 1: 95.760 - Low Nov 13
- SUP 2: 95.750 - Low 27 Nov ‘23
- SUP 3: 95.480 - Low Jan 11 2023 and a major support
Prices hit a fresh pullback low at 95.760 across the global rates sell-off, extending losses on the break through 96.080 support. This confirms the downside bias, with support undercutting at 95.750 below ahead of major support of 95.480. For any corrective recovery to take hold, markets need to retake the 96.00 handle on a closing basis.
US TSYS: Underperforming Global Peers In Twist Flattening Move
Treasuries closed Friday little changed, underperforming global peers.
- Futures traded within Thursday's ranges, with data having little lasting impact: November flash services PMI was much stronger than expected and the highest since March 2022, though soft employment and output price inflation metrics softened the impact.
- Elevated final November UMichigan survey long-term inflation expectations saw Treasuries hit the worst levels of the day, but the move reversed.
- The limited move in yields stood in contrast to pronounced gains in Europe, where weaker-than-expected PMIs renewed concern over regional growth and boosted ECB rate cut pricing. That helped boost Treasuries in overnight trade, but as noted, the US rate move subsided.
- Futures volumes remained robust (2.4M TYZ4), though again it was largely quarterly roll-related.
- The curve twist flattened on the day, and Friday's moves left 10Y yields just 2bp lower on the week.
- Latest levels: The Dec 24 T-Note future is up 5/32 at 109-21, having traded in a range of 109-16.5 to 109-26.5. 2-Yr yield is up 1.8bps at 4.3665%, 5-Yr is down 0.9bps at 4.2948%, 10-Yr is down 1.8bps at 4.4041%, and 30-Yr is down 1.1bps at 4.5906%.
- MNI's weekly US macro wrap is here (PDF).
- Next week's schedule is condensed by the Thanksgiving holiday, with highlights including FOMC Minutes (MNI Preview here - PDF) and GDP/PCE data.
OPTIONS: US Options Summary
Friday's US rates/bond options flow included:
- SFRZ4 95.50/95.56/95.62c fly, bought for 0.75 in 5k total.
- SFRF5 95.75/95.62/95.50p fly, bought for 3 in 5k.
- SFRM5 96.50/97.00cs, sold at 5.25 in 8k.
- SFRM5 97.00/97.50c strip vs SFRZ5 97.50c, bought the strip for flat in 5k
- SFRZ5 96.125 ^ sold at 87.5 in 500
- 2QH5 97.25/97.50cs, bought for 1.5 in 5k
