POWER: Poland's January Climbs to Another Fresh High as Temps Support
Poland’s January continue to climb to be supported by a downward revision of average temperatures to reach another fresh all-time high. The contract has been on steady upward trend since 27 October.
- Poland’s January baseload power settled at PLN516.94/MWh compared to its settled price of PLN510.22/MWh on 19 December, according to data on Polish power exchange TGE.
- EUA DEC 26 down 0% at 87.02 EUR/MT
- Rotterdam Coal JAN 26 down 0.9% at 95.2 USD/MT
- EUAs/UKAs December 2026 have regained some ground in the morning session, with UKAs extending the recent rally while EUAs are holding below the 17 December high.
- The 630MW Plock power plant will still be disconnected over 9-24 January, while the 670MW Gryfino unit 9 at the 1.34GW Gryfino power plant will be still be offline over 1-5 January.
- The 1.34GW Jaworzno 3 power plant will be curtailed by up to 775MW over 6-17 January.
- However, works at other key power plants will be limited over the month.
- Average temperatures in Warsaw were mostly revised lower over 1-31 January and are expected to be below the seasonal throughout the entirety of January, reaching as low -4C on 5 January.
- Closer in, average temperatures in Warsaw were mostly revised lower over 23-27 December by as much as 1C. Temperatures are expected to be below the seasonal norm over 24-26 December before returning above over 27-30 December and flipping back below over 31 December- 4 January.
- The 910MW Jaworzno 2 power plant unplanned 230MW curtailment will still last until 22 December, extended from 21 December, while the 474MW Patnow power plant will still have unplanned works over 25-31 December.
- The day-ahead dropped to PLN475.61/MWh for Tuesday delivery from PLN546.49/MWh for Monday amid wind expected at 22% load factor tomorrow compared to 8% today.
Looking ahead, wind is anticipated to be at a 1.65GW, or a 18% load factor on 24 December (Wednesday) – which could support spot costs.
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RATINGS: Moody's Upgrades Italy To Baa2 From Baa3, Still A Notch Below Others
The Moody's upgrade to Italy's credit rating announced late Friday was the first from the agency since 2002 but shouldn't be considered a major surprise. Among the 3 major ratings agencies, Moody's had the lowest rating on Italy - by two notches (Fitch and S&P both BBB+).
- So this upgrade to Baa2 from Baa3 represents something of a closing of that gap rather than a major breakthrough for Italy.
- From the release:
- "The rating upgrade reflects a consistent track-record of political and policy stability which enhances the effectiveness of economic and fiscal reforms and investment implemented under the National Recovery and Resilience Plan (NRRP). It also points to prospects of further policy actions supporting growth and fiscal consolidation beyond the plan's deadline in August 2026. As a result, we expect that Italy's high government debt burden will gradually decline from 2027 onwards."
FED: Heading Into Its Final Weeks, QT Pace Remains At $20B/Month (2/2)
On the asset side of the Fed balance sheet, we saw a $25B drop in assets, of which just $2B could be attributed to QT in one of its final weeks (ends Dec 1).
- Instead it was a $6B drop in dealer repo operations vs a week earlier, and $17B in "other" areas that aren't related directly to monetary policy and typically don't have any significant impact on the size of the balance sheet (such changes are largely due to items such as bank premises, accrued interest, and other accounts receivable.)
- Discount window takeup edged up $0.3B to $6.1B but remains relatively low.
- QT has totaled just under $21B over the last month, around the expected pace, though as noted this will flatline in December with a pickup in net bills as MBS proceeds are rolled over into T-bills.
LOOK AHEAD: US Week Ahead: Retail Sales, PPI & Claims Headline Thanksgiving Week
A Thanksgiving-condensed week sees data highlights from delayed retail sales and PPI reports for September on Tuesday (Nov 25) before a Wednesday release for weekly jobless claims (Nov 26). Aside, the Fed’s Beige Book should also offer another important update on Wednesday for latest liaison reporting, with no Fedspeak currently scheduled around the holiday and the FOMC media blackout due to start on Saturday, Nov 29.
- As we regularly comment in this weekly publication, Redbook and Chicago Fed CARTS indicators point to solid nominal growth in retail sales, something broadly reflected in analyst consensus for the release.
- PPI inflation will offer a useful albeit not overly timely update on input cost pressures.
- Jobless claims will be watched particularly closely, both for latest initial claims for signs of layoffs and a notable update for continuing claims. The latter covers the payrolls reference period for November and will be an important reference point for FOMC members trying to get a sense of latest unemployment rate clues with the next payrolls reports coming after the Dec 9-10 FOMC decision (going into it with this week’s 0.12bp rise to 4.44% back in September).
