POWER: Italy January Opens Higher
Dec-12 09:03
The Italian January power base-load contract is opening higher amid price increases in TTF. Temperatures in Rome have been mostly revised higher next month and will be generally above the seasonal norm, which could weigh on heating demand.
- Italy Base Power JAN 26 up 0.1% at 114 EUR/MWh
- Italy Base Power 2Q25 down 0.1% at 107.63 EUR/MWh
- Italy Base Power 3Q25 up 0.8% at 86.68 EUR/MWh
- Italy Power Cal 2026 up 0.5% at 99.82 EUR/MWh
- TTF front month has edged higher on the day but still set for another net decline on the week and near the lowest since April 2024 as mild weather is forecast to continue through mid-month.
- Algeria gas flow to Italy at Mazara is estimated at 41.0mcm/d today compared to an average of 42.8mcm/d over the previous week, Bloomberg shows.
- Italy front-month power/TTF 30-day correlation stood at 0.79 as of Thursday’s close.
- The latest two-week ECMWF weather forecast for Rome suggests mean temperatures have been mixed, with upward revisions over 14-17 December and downward revisions over 12-14 December.
- Temperatures are expected to oscillate above and below the seasonal average throughout the forecast period.
- Mean temperatures in Rome are forecast at 8.82C on Saturday, from 9.05C on Friday and below the seasonal average of 10.2C.
- The PUN index settled at €115.39/MWh for Friday’s delivery, down from €116.92/MWh for Thursday’s delivery.
- Wind output in Italy is forecast between 285MW and 2.42GW during base load on 13-21 December.
- Italian wind output is forecast at 624MW during base load on Saturday, from 712MW on Friday, according to SpotRenewables.
- Italian residential/commercial gas demand is forecast at 127.25mcm/d on Saturday, from 145.1mcm/d the day before, Bloomberg data showed.
- Italy’s hydro balance forecast has revised higher on the day to end at -1TWh on 26 December, compared to -1.16TWh previously estimated, Bloomberg data showed
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GBP: Spot Slips on Growing Political Risk, Underperformance in UK Bonds
Nov-12 09:02
GBP weakness does coincide with Streeting's comments being more widely circulated in UK media e.g. Here: https://www.telegraph.co.uk/politics/2025/11/12/politics-latest-news-keir-starmer-leadership-challenge-pmqs/ but nothing particularly new after his appearance on the BBC this morning.
- No real standout volumes on the move: GBP futures activity has picked up, but not notably - suggesting price action here may not be tied to sizeable flow. The more gradual nature of the move in spot also supports this.
- Move in GBP may instead be fix related into 9am - or tied to the underperformance in Gilt markets relative to broader European bonds.
- GBPUSD has stabilised just above the new daily low of 1.3115.
GILTS: Leading The Wider Sell Off
Nov-12 08:56
Gilts lead the sell off in core global FI markets this morning.
- A reminder that this comes after Tuesday’s outperformance in the wake of weak UK labour market data and key resistance holding in futures.
- Rumours surrounding a potential leadership challenge within the ruling Labour Party, presence of syndicated gilt supply (albeit I/L) and the bid in equities (gilts having a higher beta than Bunds) seem to be the driving factors.
SWAPS: EUR10s30s On Track For Fresh Closing Higher, Nears 30bp
Nov-12 08:53
EUR 10s30s is nearly 7bp steeper since October 30 and is on track for a fresh cycle closing high at ~29bp.
- Confirmation of/reiterations surrounding the transition plans of large Dutch pension funds (as the sector moves to a defined contribution system from defined benefit, lessening the need for long end receiver flow) has reignited steepener interest, albeit with positioning in these trades already deemed to be somewhat heavy.
- Multi-year sell-side targets that we have seen generally point to further extension of the steepening, driven by speculation surrounding and the delivery of Dutch pension reallocations.
- 30bp presents the next obvious area of upside interest, followed by the Oct 7 ’21 closing level (35.03bp).
