EMISSIONS: UKAs Rise Amid UK Equities Gains
UKAs Dec25 are rising as the UK equities gains lifting the carbon price, with the 30-day correlation between UKA-FTSE100 was at 0.57.
- UKA DEC 25 up 0.59% at 47.49 GBP/t CO2e
- No ICE Daily Futures trade yet on the day
- NBP Gas JUN 25 up 0.4% at 78.25 GBp/therm
- FTSE 100 JUN 25 up 0.6% at 8514
- ICE UKA futures daily aggregate traded volume at 3,754 contracts in the previous day, up 36.02% compared with the 30-day average daily volume.
- Correlation between EUA/UKA for 30-day period remained high at 0.72.
- Correlation between UKA/FTSE100 for 30-day period remained high at 0.57.
- The EUA Dec25 premium to the UK equivalent remained at a similar level at €10.75/t CO2e.
- UK gas demand, including power generation and exports, is forecast at 143 mcm/d, significantly below the five-year average of 220 mcm/d, according to National Grid.
- The latest month-ahead ECMWF weather forecast for the UK has been revised down for most days, and the suggested mean temperatures is seen below average between 3-23 May.
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EUROPEAN INFLATION: Analysts Largely Leave Intact Previous Calls For EZ HICP
Ahead of the Eurozone-wide HICP March flash release scheduled for 10:00BST today, analysts seem to broadly keep in place their previous forecasts for headline inflation - consensus is for a 0.1pp deceleration to 2.2% Y/Y - key highlights from the analysts' comments we've received following yesterday's national level releases from Germany and Italy. Note that MNI's own tracking estimate looks for 2.1%Y/Y with symmetrical risks:
- Barclays: "we track EA headline and core HICP at 2.2% y/y and 2.4% y/y, respectively, in line with our forecasts"
- Goldman Sachs: "We now track Euro area March core inflation at 2.38%yoy, and pull our headline inflation tracking down to 2.14%yoy, both 1bp lower than our previous estimate."
- JP Morgan: "We stick with our forecast that [today's] Euro area release will print at 2.4%oya for core inflation [...] For Euro area headline inflation, we stick with our forecast of 2.3%oya"
- Morgan Stanley: "We keep our forecast for euro area headline HICP inflation at 2.2%Y in March (consensus 2.2%Y) and take down core HICP to 2.4%Y."
STIR: A Little Over 50bp Of BoE Cuts Priced Through Dec, Greene Eyed
Spillover from cross-asset moves and ECB pricing has shaped GBP STIR trade since yesterday’s settlement.
- BoE-dated OIS little changed to ~1.5bp more dovish vs. closing levels.
- 18bp of cuts showing for next month (we still look for a cut at that meeting), with 22bp of cuts showing through June, 35bp through August and 52bp priced through year-end.
- SONIA futures last flat to +2.5.
- Multi-week ranges intact across GBP STIRs, even after the dovish moves seen in recent sessions.
- Final manufacturing PMI data and comments from BoE MPC member Greene (on UK policymaking/macro conjuncture at 09:15 BST) headline the UK calendar today.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
May-25 | 4.275 | -18.1 |
Jun-25 | 4.235 | -22.1 |
Aug-25 | 4.109 | -34.7 |
Sep-25 | 4.058 | -39.8 |
Nov-25 | 3.974 | -48.2 |
Dec-25 | 3.938 | -51.7 |
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