LNG: Long-Term LNG Contract Tenures Shortening: Platts
Mar-06 14:11
The global LNG market is experiencing a shift in long-term contract durations, moving from the traditional 20-plus years to mostly 3-5 years, Platts said.
- This change is driven by evolving supply-demand dynamics and the rise of portfolio companies and trading houses.
- A Middle East-based producer told Platts that it previously offered 20- 25-year contracts, but has reduced contract lengths to 10-15 years, and more recently to 4-5 years.
- Portfolio companies are driving this trend, offering shorter tenures and various flexibilities, such as FOB loadings, hybrid pricing, and destination diversion rights, to attract buyers.
- Oman LNG, for example, has signed several contracts of less than 10 years as its long-term agreements expire.
- Global LNG supply is expected to remain tight through 2025-2026 due to project delays, but new projects coming online from 2026 onward should then ease the market.
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STIR: Effective Fed Funds Rate
Feb-04 14:05
- FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $94B
- Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $264B
- Earlier Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.35% (-0.03), volume: $2.413T
- Broad General Collateral Rate (BGCR): 4.33% (-0.01), volume: $913B
- Tri-Party General Collateral Rate (TCR): 4.33% (-0.01), volume: $890B
- (rate, volume levels reflect prior session)
FOREX: CADJPY Recovery Bolstered by Hold of Trendline Support
Feb-04 14:01
- Following in the footsteps of Mexico’s administration, Canadian PM Justin Trudeau announced an agreement with the US, circumventing the immediate implementation of 25% tariffs.
- CADJPY has moderately outperformed following the sharp CAD recovery from Monday’s lows, extending the bounce to 2.93% in recent trade, and up 0.68% during today’s session.
- The recovery has been bolstered by the cross holding trendline support on Monday, drawn from the 2020 lows. The trendline intersects close to the psychological 105.00 handle, which has proved pivotal on a closing basis over the last 18 months.
- An extension of strength today has narrowed the gap to both 20- and 50-day EMAs, currently intersecting at 108.13 and 108.52 respectively.
- ING believe markets are not fully pricing out the tariff threat just yet. Primarily because of the short delay, but also because headlines have provided a higher degree of uncertainty and unpredictability that harms high-beta currencies. This is due to direct protectionism exposures and due to risk sentiment implications.
- However, they highlight a cross like AUD/CAD should trade sharply lower given Canada has dodged tariffs and China has not, but it is only 0.5% lower on the day. That signals markets are pricing in a good chance that the US and China will also strike a deal and delay tariffs.
BONDS: Core Bonds are seeing broader selling
Feb-04 13:55
- Some selling in Govies across both sides of the Pond, and while the Volume in Tnotes is fairly subdued, the German Bund sees a notable session in terms of Volumes.
- Initial support in Bund is seen at 132.34, Monday's opening gap.
