POWER: German May Power Imports From France Well Above 5-Year Average
May-28 12:25
Germany’s net power imports from France averaged 3.03GW so far this month, well above the five-year May average of 1.47GW, and 860MW above 2024 levels, amid low demand and higher solar generation in France.
- German net power imports from France are also tracking the highest since at least 2020. May imports from France averaged 2.17GW last year.
- In Germany, power demand so far this month averaged 48.68GW, 341MW higher on the year but still 2.33GW below the five-year average.
- On the supply side, German solar PV output so far this month averaged 13.24GW, 1.72GW higher year on year and 3.59GW above the five-year average.
- German combined onshore and offshore wind output averaged 13.17GW month-to-date, also 2.73GW above 2024 levels and 1.96GW above the five-year average. This comes after low wind output in the February-April period.
- In France, low demand, high solar PV output and somewhat above-normal nuclear generation has supported exports.
- French power demand averaged 40.6GW so far this month, which was 923MW below 2024 levels and 2.06GW below the 2020-24 average.
- Nuclear generation fell sharply on the year to 34.02GW versus 37.21GW in 2024, but remained 349MW above the five-year average for all of May, with lower output due to increased modulation.
- Solar generation in France has averaged 4.37GW so far this month, 1.1GW above 2024 May levels and 1.64GW above the five-year average.
- The German day-ahead base load on the Epex Spot averaged €68.71/MWh so far this month, holding a €50.02/MWh premium to the French equivalent. This compares to a premium of €42.13/MWh for all of May 2024.
- France’s RTE was expected to resume export curbs due to grid limitations this spring, it said last November. However, an oversupplied market with many negative priced hours amid high solar output is making export reductions to neighbouring countries more unlikely.
- Looking ahead, the German June power base-load contract is currently trading at a €41.80/MWh premium to France, further supporting high import expectations next month. The premium has narrowed from a high of €58.59/MWh on 13 May.
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US: MNI POLITICAL RISK- GOP Starts Writing Up 'Big Beautiful Bill'
Apr-28 12:22
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- Congress returns today ahead of a hectic month during which Republican committees must write up the text of the ‘big beautiful’ reconciliation bill that will cover the bulk of President Donald Trump’s agenda.
- The Treasury Department is expected to send Congress its X-date projection this week.
- Trump’s approval rating continues to fall at a rate that will flash warning signs for Republican lawmakers facing tight re-election races in 2026.
- US consumers and businesses are bracing for Trump’s trade war to bite as US ports prepare to receive the first container ships from China to face steep tariffs.
- US exports of soybeans and pork to China have plunged. Markets will be watching for Trump’s response to any downturn in the agricultural sector in light of a first-term bailout package that nearly matched revenue generated by tariffs.
- The US is unlikely to reach a comprehensive trade deal with South Korea before the country’s presidential election on June 3.
- The Chinese government continues to deny the existence of trade talks with the US.
- Canadians head to the polls today to vote in a snap general election that has been upended by Trump's trade war and rhetoric towards Canada’s sovereignty.
- Ukraine’s backers are hoping a tone shift from the Trump administration could open the door for more favourable negotiations with Russia.
- Poll of the Day: A majority of US voters think Trump has exceeded his authority.
Full Article: US DAILY BRIEF
US SWAPS: J.P.Morgan Recommend 30-Year Swap Spread Wideners With S&P Hedge
Apr-28 12:20
Late on Friday J.P.Morgan recommended “initiating 30-Year swap spread wideners, paired with a risk weighted short in S&P 500 futures.”
- This comes after they turned “bullish on swap spreads given fair value considerations and tariff progress but recommend hedging with S&P 500 futures given the recent correlation of spreads to equities since early April”.
FOREX: Fresh Session Lows for USDJPY, 144.00 Caps Topside
Apr-28 12:17
- The relatively stable and more constructive tone for risk sentiment last week weighed on the low yielding currencies, helping the likes of USDJPY to extend its corrective cycle. The pair rallied near to 3% from the lows as we approached the Friday close, with a brief test of 144 capping the topside for now.
- While a notable recovery, spot remained shy of initial resistance, which now comes in at 144.47, the 20-day EMA. Overall, moving average studies are in a bear-mode position highlighting a dominant downtrend. As such, USDJPY has been edging lower across the European morning on Monday, printing fresh session lows below 143.30 at typing.
- Goldman Sachs see USDJPY falling to 135 over the next 12 months, with risks skewed towards getting to (and below) that level much earlier. But given that equities still look vulnerable to nearer-term downside and the speed of the Dollar sell-off leaves it susceptible to shorter-term swings, GS prefer to be short AUDJPY tactically.
- As a reminder, the BOJ is expected to keep its 0.5% policy interest rate unchanged this week, as policymakers monitor the economic and inflationary impact of recent U.S. trade policies and market volatility. Overnight, Japan’s top currency diplomat Mimura confirmed there were no talks about FX target held during US-Japan discussions.
