POWER: End of Day Power Summary: CWE, Italy, Iberian Hold Onto Losses
Oct-18 15:53
CWE, Italy, and Iberian front-month power futures remained down on Friday, tracking losses in TTF and EU ETS markets. Germany faced a weekly net loss due to emission declines and subdued movement in EU gas on the week, while France saw gains, driven by cooler weather and reduced nuclear availability, narrowing the FR-DE spread on the week.
- Spain Base Power NOV 24 down 1.9% at 74 EUR/MWh
- Italy Base Power NOV 24 down 1.5% at 113.29 EUR/MWh
- France Base Power NOV 24 down 3.1% at 75.45 EUR/MWh
- Germany Base Power NOV 24 down 1.3% at 86.92 EUR/MWh
- EUA DEC 24 down 0.7% at 62.51 EUR/MT
- TTF Gas NOV 24 down 1% at 39.25 EUR/MWh
- Rotterdam Coal NOV 24 down 0.7% at 116.75 USD/MT
- European gas prices slipped back into negative territory – after earlier gains – due to maintenance delays in Norway being cancelled. cooler forecasts later in the month are expected to provide some support. Additionally, healthy storage levels are exerting further downward pressure on prices.
- EU ETS Dec24 has held onto losses and is trading lower, influenced by movements in EU gas prices. Carbon allowances are still on track for a weekly decline exceeding 3%, indicating ongoing market pressure.
- EU carbon prices are expected to surge by 2027 with average prices seen at €111.14/ton CO2e amid anticipated lower supply.
- France plans to issue tenders for two fixed and three floating wind farms totalling 9.2GW in the coming months – 5.2GW of floating and 4GW of fixed.
- French TotalEnergies has raised concerns about the high costs of floating wind projects compared to bottom-fixed alternatives.
- EdF has shortened its curtailment at its 1.33GW St.Alban 1 reactor to 20 Oct from 21 Oct.
- TVO’s nuclear power generation from its three Olkiluoto nuclear reactors in Finland stood at 16.82TWh in the first nine months of this year, down from 17.62TWh in the same period in 2023.
- Lithuanian TSO Litgrid has successfully connected an 85MW wind farm developed by Green Genius in southwest Lithuanian, with full commissioning in 4Q25.
- Poland’s front-month power contract failed to continue climbing from the previous session during Friday’s session to settle at its lowest price since 10 Oct to track losses in European coal and emissions.
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BOE: Risk-reward in SONIA still tilted to less cuts - but 50bp Fed poses risks
Sep-18 15:53
- The August inflation print is still a bit softer than the BOE’s forecast, particularly for services prices. However, we don’t think it is weak enough for any MPC member to immediately change their underlying view.
- The market reaction has been to price in a less aggressive cutting cycle (albeit this is a trend in wider global STIR markets today). We have gone from cuts being almost fully prices sequentially from November 2024 to May 2025 (with a further cut fully priced by August 2025) to pricing around 46bp by end-2024 (down 5bp) and 140bp cumulatively by August 2025 (down around 10bp). In terms of pricing for tomorrow’s MPC meeting, markets now price around a 9% probability of a 25bp cut, down from around 18% yesterday.
- We still struggle to rationalize cuts of greater than 25bp for the BOE with inflation and wage growth at current levels – and by time they are more target-consistent we will be a lot closer to neutral if we have seen sequential cuts along the way.
- So to us, yesterday’s pricing represents close to the plausible extreme, with risks of a slower cycle (and still risks skewed to a slower cycle than current pricing).
- Having said that, we do think that if the Fed cuts 50bp there will be spillover to UK markets and at that point markets could move to price a more extreme cutting cycle than we had yesterday.
CANADA: BoC Minutes Ahead With Markets Looking For Larger Cut Clues
Sep-18 15:35
- The BoC minutes are still to come today at 1330ET, in likely their most overshadowed release yet with an unusually uncertain Fed decision to follow just 30 minutes later.
- Gov. Macklem said at the Sep 4 press conference that there had been “strong consensus” for the third consecutive 25bp cut, as broadly the case for the July decision as well.
- We watch for any further colour around the scenarios he talked to on both pausing cuts or ramping the pace of cuts up to 50bps, and a sense of bias towards those risks from Governing Council members looking ahead.
- Senior Dep Gov Rogers yesterday said cooling inflation is “welcome news” after headline reached the 2% target midpoint although still wants to see more progress on core inflation measures.
- BoC-dated OIS still shows sizeable odds of a ramping up the pace of cuts with 38bp priced for the Oct 23 decision and a cumulative 73-74bp for the two meetings left this year.
US TSYS: US TSY 17W BILL AUCTION: HIGH 4.660%(ALLOT 59.27%)
Sep-18 15:32
- US TSY 17W BILL AUCTION: HIGH 4.660%(ALLOT 59.27%)
- US TSY 17W BILL AUCTION: DEALERS TAKE 38.22% OF COMPETITIVES
- US TSY 17W BILL AUCTION: DIRECTS TAKE 3.32% OF COMPETITIVES
- US TSY 17W BILL AUCTION: INDIRECTS TAKE 58.46% OF COMPETITIVES
- US TSY 17W BILL AUCTION: BID/CVR 3.05
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