NATGAS: Russia-Ukraine 28-Point Peace Plan & Potential Impact for Natgas Part 2
Nov-21 14:47
Unpicking sanctions on Russian LNG from the EU under a peace deal. may prove far more difficult, given the hawkishness towards the Kremlin across the continent.
- While the EU is said to have rejected this 28-point plan, if it was forced into agreeing, it remains unclear whether these agreements as part of sanctions packages may have to be abandoned. The EU will likely continue to seek to minimise any dependence on Russian gas.
- Under the least likely scenario, conditional on not only a peace deal, but lifting all sanctions, this could also free up Russian LNG flows into Europe. Spot buying largely stopped after Feb 2022 without sanctions, while legislation looks to phase out all Russian LNG into Europe by 2027.
- Pipeline imports are due to be phased out by 2028, this may be easier to loosen, perhaps allowing the status quo of flows via Turkstream to continue.
- Other ideas like a rebuilding of Nordstream may struggle to garner enough political support. Restarting 16 bcm of flows via Ukraine would also be a hard sell, although would enjoy support from recipient countries like Slovakia.
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SEK: Risk In EURSEK Remains Tilted To The Downside
Oct-22 14:40
- Risk in EURSEK remains tilted to the downside, with spot hovering just above support at 10.9036, the Sep 15 low. Clearance of this level would expose the April 4 low at 10.7941. Spot is on track for a sixth consecutive close lower, currently -0.25% today.
- It’s been another session with relatively few domestic catalysts. Riksbank Deputy Governor Jansson noted that it is reasonable to look through the upcoming temporary reduction in food VAT. However, the Board will “monitor how households' and companies' expectations and behaviour are affected, so that fluctuations in inflation that are temporary to begin with do not become more permanent."
- This isn’t a surprising view to hold. We continue to believe that the policy rate will remain at 1.75% for some to come, with the risk of a hike to 2.00% somewhat greater than the risk of another cut.
- Today’s SEK strength comes despite a fairly subdued session for European equity futures. This week’s SEK outperformance may therefore reflect increased sympathy for domestically-focused narratives (i.e growth tailwinds from accommodative monetary policy and an expansionary 2026 budget).
GILT AUCTION PREVIEW: CORRECTION: Auction Size
Oct-22 14:35
The DMO has announced a GBP3.75bln, not GBP4.75bln auction size for the new 4.125% Mar-33 Gilt next Wednesday.
US STOCKS: Extending Lows
Oct-22 14:30
- Stocks extending session lows in the last couple minutes, SPX eminis and Nasdaq leading the decline with Consumer Discretionary, Communication Services and IT sector shares underperforming.
- DJIA down 124.3 points (-0.26%) at 46,803.25
- S&P E-Mini Future down 18.75 points (-0.28%) at 6,756.25
- Nasdaq down 139.5 points (-0.6%) at 22,820.28
