POWER: Italy October Power to Open Higher
The Italian October base-load power contract is expected to open higher, once liquid, tracking gains in EU gas prices.
- Italy Base Power OCT 25 closed down 0.1% at 107.57 EUR/MWh on 5 Sept
- Italy Power Cal 26 closed down 0.3% at 104.78 EUR/MWh on 5 Sept
- TTF Gas OCT 25 up 1.6% at 32.485 EUR/MWh
- EUA DEC 25 up 0.4% at 76.33 EUR/MT
- TTF front moth gains but still within the €31.4/MWh to €32.7/MWh range from last week as China ramps up purchases of sanctioned Russian energy. China looks set to receive more LNG from the sanctioned Arctic LNG 2 export facility in Russia after the first laden vessel docked at China’s Beihai port on 28 August.
- The latest two-week ECMWF weather forecast for Rome suggests mean temperatures are expected to remain above normal through the forecast period, with slightly cooler temperatures this week.
- Mean temperatures in Rome are forecast at 24.1C on Tuesday, up from 23.5C on Mondy and above the seasonal normal of 22.6C.
- The PUN index rose to €121/MWh for Monday’s delivery, from €95.86/MWh a day earlier.
- Wind output in Italy is forecast at 1.04GW during base load on Tuesday, up from 695MW on Monday. Solar PV output is forecast at 7.95GW during peak load on Tuesday, down from 9.19GW on Monday according to SpotRenewables.
- Residual load in Italy is forecast at 28.67GWh/h on Tuesday, from 27.26GWh/h on Monday, Reuters data showed.
- Power demand in Italy is forecast at 34.87GWh/h on Tuesday, from 33.22GWh/h on Monday, Reuters data showed.
- Italy’s hydro balance forecast has been largely stable to end at 532GWh/h on 22 September, Bloomberg data showed.
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AUSSIE 10-YEAR TECHS: (U5) Recovers With Treasuries
- RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 1: 95.960 - High Apr 7
- PRICE: 95.710 @ 14:34 BST Aug 8
- SUP 1: 95.415/95.300 - Low May 15 / Low Jan 14
- SUP 2: 95.275 - Low Nov 14 (cont) and a key support
- SUP 3: 94.707 - 1.0% 10-dma envelope
Aussie 10-yr futures received a boost from the US Treasury rally that followed a poor NFP print. This keeps Aussie 10-year futures toward the top end of the recent range. To the upside, next resistance is at 96.207, a Fibonacci retracement point. Next support undercuts at 95.420 (pierced), the Feb 13 low, ahead of 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish condition.
SECURITY: Trump To Sign Trilateral Peace Accord With Armenia/Azerbaijan Shortly
US President Donald Trump is shortly due to sign a trilateral peace agreement with Armenian Prime Minister Nikol Pashinyan and Azerbaijani President Ilham Aliyev at the White House. LIVESTREAM The event will provide another opportunity for Trump to style himself as peacemaker, after touting success in brokering peace deals between Rwanda/Congo, Cambodia/Thailand, and India/Pakistan.
- The accord aims to resolve a decade-long dispute over the sovereignty of Nagorno-Karabakh - a breakaway Azerbaijani province that was under de facto Armenian control from the dissolution of the Soviet Union until a 2020 war.
- Trump described the meeting on Truth Social as a “historic peace summit,” noting that the US will also sign “Bilateral Agreements [to] fully unlock the potential of the South Caucasus Region.”
- White House spokeswoman Anna Kelly told reporters that Trump would sign deals with both Armenia and Azerbaijan on energy, technology, economic cooperation, border security, infrastructure and trade.
- A White House official said: "It's about the entire region, and [the leaders] know that that region is known to be safer and more prosperous with President Trump."
- Reuters reports that the US will have development rights to build transportation links in the strategic Zangezur Corridor, a mountainous stretch of Armenian territory between Azerbaijan and its Nakhichevan exclave.
- Politico notes: “But whether this is just a photo opportunity or a lasting end to a conflict that has undermined stability in a region dominated by Russia and Iran will depend on whether the US can address several key challenges.”
FED: Balance Sheet Runoff Continues At Steady $20B/Month Pace (2/2)
Fed asset holdings were little changed in the past week. SOMA runoff totaled $2.8B (composed of $4.2B less nominal Tsy holdings and $1.4B more TIPS), with emergency lending/liquidity facilities $0.7B lower.
- Over the last 4 weeks, the $20B/monthly expected QT pace was roughly adhered to: MBS fell $18B, with Treasury net holdings down around $2B (a fall in TIPS holdings offsetting a slight rise in nominals).
- Discount window usage accounted for the fall in lending facility usage this week; takeup is now down to $4.9B, down $1.3B in the last month and down from the 1-year high of $6.4B set in July which looks to have been a temporary blip higher.
