POWER: Italy January Power to Open Higher
Dec-17 08:26
The Italian January power base-load contract is set to open higher with gains in EU gas prices.
- Italy Base Power JAN 26 closed down 0.3% at 114.09 EUR/MWh on 16 Dec
- Italy Power Cal 26 closed down 1% at 99.97 EUR/MWh on 16 Dec
- TTF Gas JAN 26 up 1.6% at 27.195 EUR/MWh
- EUA DEC 26 up 0.9% at 88.18 EUR/MT
- Italy front-month power/TTF 30-day correlation stood at 0.76.
- European gas prices rise on Wednesday on signs of colder weather boosting demand.
- The latest two-week ECMWF weather forecast for Rome suggests mean temperatures will be above normal through this week and broadly in line with the average for most of next week before moving below the average.
- Mean temperatures in Rome are forecast at 12.2C on Thursday, from 11.9C on Wednesday and above the seasonal average of 10C.
- Italy’s PUN index settled at €120.14/MWh, compared with €121.83/MWh for Tuesday’s delivery, according to GME.
- Wind output in Italy is forecast between 762MW and 4.41GW during base load on 18-26 December, according to SpotRenewables.
- Italian wind output is forecast at 762MW during base load on Thursday, from 1.73GW on Wednesday.
- Residual load in Italy is forecast at 32.44GWh/h on Thursday, up from 31.57GWh/h on Wednesday, Reuters data showed.
- Power demand in Italy is forecast at 35.75GWh/h on Thursday, from 36.1GWh/h on Wednesday, Reuters data showed.
- Italian residential/commercial gas demand is forecast at 120.8mcm/d on Thursday, from 137.4mcm/d on Wednesday and revised down from 132.7mcm/d previously, Bloomberg data showed.
- Italy’s hydro balance forecast has been revised up to end at -1.11TWh on 31 December, from -1.29TWh previously, Bloomberg data showed.
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GILTS: Off Lows But Holding Most Of Friday's Sell Off
Nov-17 08:24
Gilts firm alongside core global FI peers with any selling pressure at the open quickly countered.
- A reminder that the reintroduction of fiscal risk premium to gilts after Chancellor Reeves’ apparent u-turn on income tax hikes triggered a sharp sell off in UK paper on Friday.
- Futures little changed at 92.15 after the bearish correction extended further on Friday.
- Initial support of note located at 91.82, while bulls will need to close Friday’s opening gap lower (93.35) to start turning the technical tide back in their favour.
- Yields 1.0-2.5bp lower, curve bull steepens.
- Benchmark yields have registered the highest level of November over the past couple of sessions.
- Weekend press reports were focused on smaller taxes and opinion pieces surrounding fiscal policy, nothing to really move the market.
- Gilt/Bunds ~185.5bp, little changed after lodging the highest close since Oct 21 on Friday.
- BoE MPC member Mann will speak this afternoon (13:20 London). A reminder that we have previously suggested that speeches from MPC members outside of Governor Bailey are likely to have less impact for markets in the run up to the December decision (given their entrenched views).
- CPI data (Wednesday) headlines this week’s UK calendar (see our gilt Week Ahead & morning STIR bullet for more on that release, our full preview will cross in due course).
GILT TECHS: (Z5) Corrective Bear Cycle
Nov-17 08:20
- RES 4: 93.33 Low Nov 13 a gap high on the daily chart
- RES 3: 93.07 20-day EMA
- RES 2: 92.85 High Nov 14
- RES 1: 92.44 50-day EMA
- PRICE: 92.12 @ 08:10 GMT Nov 17
- SUP 1: 91.94 Intraday low
- SUP 2: 91.82 High Sep 11 and a former key breakout level
- SUP 3: 91.67 50.0% retracement of the Sep 3 - Nov 4 bull leg
- SUP 4: 91.12 61.8% retracement of the Sep 3 - Nov 4 bull leg
Gilt futures gapped sharply lower on Friday. For now, a move down is considered corrective and the next key support to watch lies at 91.82, the Sep 11 high and a former key breakout level. Moving average studies remain in a bull-mode position, highlighting a dominant uptrend. First resistance to watch is 92.85, the Nov 14 high. On the downside, a break of 91.82, the Sep 11 high, would strengthen a bear theme.
SWITZERLAND DATA: Q3 GDP Downwardly Surprises, Pharma Drags
Nov-17 08:16
Swiss GDP growth surprised to the downside in Q3, at -0.5% Q/Q (-0.1% consensus, 0.1% Q2), seeing its worst quarterly growth rate since Q1 2020.
- While undoubtedly weak, we do not see how the (singular) print should move the needle for the SNB, which views its monetary policy already as "accommodative". Downside pressure on inflation for continued headline CPI readings below 0% would likely be needed to put an SNB cut below 0% firmly on the table again.
- "Driven by a sharp decline in value added in the chemical and pharmaceutical sector, industry as a whole recorded negative growth. The services sector grew at a below-average rate", SECO adds.
- Forward-looking forecasts are more optimistic; KOF institute revised upwards its Swiss GDP forecasts late Friday, saying they "expect annual GDP growth [to rise] by between 0.3% and 0.5% compared to a tariff rate of 39%. This means that the seasonally adjusted economic growth forecast for 2026, currently estimated at 0.9%, will once again be well above 1%".
