POWER: Poland's October Ends Short-Lived Upward Trend
Poland’s October failed to continue climbing to drop on the day as losses in EU ETS and European coal weighed on the product. Planned works at key power plants are still limited over the month.
- Poland’s October baseload power settled at PLN414.31/MWh compared to its settled price of PLN415.64/MWh on 8 September, according to data on Polish power exchange TGE.
- EUA DEC 25 down 1% at 76.4 EUR/MT
- Rotterdam Coal OCT 25 down 1% at 95 USD/MT
- The contract ended its short-lived upward trend and settled lower compared to its price on 2 September (last Tuesday) at PLN416.24/MWh.
- Liquidity for the contract continued to climb, with 25 lots done in 23 sessions from 8 lots in the previous session.
- Mean temperatures in Warsaw have been generally revised higher on the day over 1- 13 October and generally unchanged over 14-23 October. Temperatures are expected to remain above the 30-year norm until at least 23 October
- Limited works at key power plants are still anticipated over October, with just two 242MW units at the 1.89GW Polaniec power plant disconnected over 18-19 October.
- Closer in, average temperatures in Warsaw were revised mostly down over 10-14 September. However, temperatures are still anticipated to be above the 30-year norm throughout the 14-day ECMWF forecast – reaching as high as 20C for some days.
- The 465MW Wloclawek power plant will have unplanned works over 12-14 September, with the unit fully offline over the period.
- The 833MW unit 6 at the 3.1GW Opole power plant will return to the grid on 21 September from works that began on 31 August.
- The day-ahead dropped to PLN541.85/MWh for Wednesday delivery from PLN575.65/MWh for Tuesday amid wind anticipated at a 31% load factor tomorrow compared to 21% today.
Looking ahead, wind is anticipated at a 35% load factor on 11 September, or 3.23GW – which could keep weight on costs.
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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.
