POWER: Losses in NBP, UK Emissions Could Drop UK April Power Product
Mar-17 08:29
The UK April power contract could drop lower on the day to track losses in NBP and UK emissions. Upward revision of average temperatures in London this week could also weigh on the product. Spot prices are likely to face some downward pressure for 18 March delivery due to slightly higher wind on the day, with power consumption edging down.
- UK Base Power April 25 (BFV) unchanged at 87.1 GBP/MWh
- UK Spark Spark M1 (BFV) down 0% at -9.31 GBP/MWh
- UK Emissions Dec F1 down 0.5% at 44.05 GBP/MT
- UK NBP APR 25 down 1.8% at 102.05 GBp/therm
- NBP front-month prices are trading in red on the day to track similar moves in TTF surrounding mixed temperatures at the end of the winter season while the market continues to focus on any progress toward peace in Ukraine.
- Additionally, UK LNG imports have been nominated at 60.44 mcm/d compared to the 5-day flow avg of 63.66 mcm/d, while gas demand -including power – is lower than the seasonal.
- UKA December 2025 allowances are trading slightly lower on the day weighed down by losses in EU ETS. However, cooler temperatures for the month-ahead are supportive.
- Wind output in the UK is forecast to rise to 7.93GW during base load on Tuesday from 6.49GW on Monday according to SpotRenewables.
- Wind will then be at 3.10GW, or an 11% load factor on 19 March – which could lift prices from the previous session.
- Mean temperatures in London have been revised up 21-22 March and are expected to flip above the 30-year norm on 19 March, with temps remaining higher until 24 March.
- Average temperatures are expected to drop to 5.5C on Tuesday from 6.45C on Monday and below the seasonal average of around 7C.
- However, power demand in the UK is forecast to fall to 33.39GW on Tuesday from 33.62GW on Monday, according to Bloomberg. Demand will then drop on 19 March to be at 33.18GW.
- The 620MW Hartlepool nuke is expected to return to the grid on 23 March at 23:00 UTC.
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US TSYS: Yields Pull Back Again With Consumer Growth Story In Question
Feb-14 21:08
Treasuries outperformed global counterparts Friday, fully completing a reversal from a midweek selloff.
- A large miss in January retail sales (-0.9% M/M vs 0.7% prior, -0.2% consensus) represented the biggest sequential drop in 22 months, with a similarly weak "control group" figure leading to a 0.5pp downgrade to the Atlanta Fed's GDP nowcast (to 2.3% GDP growth in Q1, i.e. no acceleration from Q4).
- That was enough to see the 10Y Treasury yield drop 7bp in the subsequent half hour, continuing the downtrend seen beginning in the immediate aftermath of Wednesday's hot CPI release. 10Y yields dropped over 21bp from the Wednesday high to Thursday's low, ultimately ending a tumultuous week 1.5bp lower.
- Yields ticked a little higher in afternoon trade Friday but the curve leaned bull steeper on the day, with the belly outperforming: 2-Yr yield is down 4.6bps at 4.261%, 5-Yr is down 5.7bps at 4.3328%, 10-Yr is down 5.1bps at 4.4782%, and 30-Yr is down 3.9bps at 4.6982%.
- In futures: Mar 10-Yr futures (TY) up 9/32 at 109-08 (L: 108-26 / H: 109-15.5).
- Other data (industrial production mixed, import prices soft) had little lasting impact.
- The coming week’s data schedule is relatively light, due in part to Monday’s Presidents Day holiday (SIFMA recommends bond cash close, equities closed), with initial jobless claims, February prelim PMIs, and regional Fed manufacturing surveys among the highlights. Supply includes 20Y Bond and 30Y TIPS auctions.
- We also get plenty of Fed communications including the January meeting minutes, and speaking appearances by both doves (Gov Waller) and hawks (St Louis Pres Musalem).
USDCAD TECHS: Bear Cycle Extends
Feb-14 21:00
- RES 4: 1.4948 High Mar 2003
- RES 3: 1.4814 High Apr 2003
- RES 2: 1.4503/1.4793 High Fb 4 / 3 and key resistance
- RES 1: 1.4380 High Feb 10
- PRICE: 1.4175 @ 16:54 GMT Feb 14
- SUP 1: 1.4107 50.0% retracement of the Sep 25 ‘24 - Feb 3 bull cycle
- SUP 2: 1.4011 Low Dec 5 ‘24
- SUP 3: 1.3944 61.8% retracement of the Sep 25 ‘24 - Feb 3 bull cycle
- SUP 4: 1.3894 Low Nov 11 ‘24
USDCAD broke lower Thursday, breaking out of a tight trading range this week and remains soft. A key support at 1.4261, the Jan 20 low, has been cleared and this signals scope for an extension of the current bear cycle - a correction. Scope is seen for a move towards 1.4107, a Fibonacci retracement. Initial firm resistance to watch is 1.4380, the Feb 10 high. A break would highlight an early bullish reversal signal.
OPTIONS: Mixed SOFR Rates Trade To Cap Week
Feb-14 20:47
Friday's US rates/bond options flow included:
- SFRH5 95.62p, traded half in 2k.
- SFRH5 96.93c, traded 0.25 in 4k.
- SFRH5 95.75/95.62ps 1x2, Traded 3.75 in 3k.
- SFRK5 97.00c, traded for 0.75 and 1 in 3k.
- SFRU5 95.93/95.81/95.68p fly, traded 1 in 1.5k
- SFRU5 96.50c, traded for 6.5 in 1.5k.
- SFRU5 95.87^, traded for 36 in 5k.
- SFRJ5 95.87/95.75/95.68p fly 1x3x2 with SFRK5 95.81/95.68/95.62p ladder 1x3x2, bought for 10 in 2k.
- SFRM5 95.68p, sold at 2.5 in 10k.
- 0QH5 96.00c, bought for 13 in 3k.
- TYH5 107p, bought for 11 in 15k
- TYJ5 107p, bought for 11 in 17k total.
- TYJ5 107/106ps, bought for 7 in 15k total.
