EMISSIONS: UKAs Rise On Greater Buying Interest
Mar-13 09:28
UKA Dec25 is rising on strong trading volume in the first hour since open amid continued bullish sentiment after the EU-UK ETS linkage reconsideration. The trading volume in the first hour is hitting a one-week high at 250 contracts, exceeding the 15-day moving average.
- UKA DEC 25 up 2.1% at 42.27 GBP/t CO2e
- No ICE Daily Futures trade yet on the day
- NBP Gas APR 25 up 0.8% at 104.99 GBp/therm
- FTSE 100 up 0.2% at 8558.32
- ICE UKA futures daily aggregate traded volume at 3,851 contracts in the previous day, up 9.72% compared with the 30-day average daily volume.
- Correlation between EUA/UKA for 30-day period tightened to 0.69 from the 0.67 on the previous day.
- The EUA Dec25 premium to the UK equivalent narrowed to €19.51/t CO2e from the €20.35/t CO2e in the previous day, amid stronger UKAs gains.
- UK gas demand, including power generation and exports, is forecast at 289.39mcm/d, above the five-year average of 248.85 mcm/d, according to National Grid.
- The 10-day ahead wind output forecast for the UK has been revised lower for 6 days. Wind output is seen low at 3.48GW to 10GW, or load factor from 12% to 35%, on 14 Mar until 22 Mar.
- The latest month-ahead ECMWF weather forecast for the UK has been revised higher between 20-28 March, and suggested mean temperatures are forecasted to be below seasonal norm from 27 March.
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NORWAY: Offsetting Productivity and Compensation Impacts From Q4 GDP Report
Feb-11 09:28
The Q4 GDP print had mixed implications for the March MPR rate path from an income/productivity perspective. Although mainland real productivity per hour growth was -0.5% Q/Q (vs 0.5% prior), annual wage growth was below Norges Bank’s December MPR projection at 5.0% Y/Y (vs 5.2% forecast, 5.7% prior).
- Whole-economy employment growth was 0.2% Q/Q (in line with the Q4 Regional Network Survey) and 0.6% Y/Y (in line with the December MPR projection). Meanwhile, hours worked grew 0.1% Q/Q on a whole-economy and mainland basis.
- These productivity, compensation and hours worked dynamics have offsetting impacts on overall unit labour cost growth.
- The weak productivity reading takes some of the shine off last quarter’s upward productivity revisions going back to 2022, but we don’t want to overstate its impact. We noted earlier that headline GDP weakness (-0.6% Q/Q) was largely due to a pullback in inventory investment, and a good deal of that would’ve bled into the mainland GDP reading too (and thus weigh on productivity growth).
- Taken alongside the GDP expenditure breakdown covered earlier, with think the Q4 GDP report should still be a dovish factor in the March MPR rate path. Governor Wolden Bache will likely reaffirm guidance for a 25bp March cut at her annual address on Thursday.
CROSS ASSET: New session lows for Bond Futures
Feb-11 09:27
- New lows for the Bund, and German Govie futures lead the way to the downside, Supply Delta hedging needs has been weighing since the Cash open.
- Tariffs announcement has also played its part, although the move in the US Treasuries lags, with the 109.01 level still holding in TYH5, this was the Post NFP printed low.
- As noted on the Bund open, 132.95 is the first downside hurdle, the NFP printed low, but better support is seen at 132.72.
- The move in Yields could keep the USDJPY underpinned.
EU-BOND SYNDICATION: 2.50% Dec-31 EU-bond / 3.25% Feb-50 Green: Final terms
Feb-11 09:23
2.50% Dec-31 EU-bond
- Spread set at MS+37bps (guidance was: MS + 39bps area)
- Size: E6bln WNG (MNI expected E4-6bln)
- Books in excess of E75bln (inc E4.5bln JLM interest)
- ISIN: EU000A3L1DJ0
3.25% Feb-50 Green EU-bond
- Spread set at MS+108bps (guidance was: MS+110bps area
- Size: E5bln WNG (MNI expected E4-6bln)
- Books in excess of E80bln (inc E5.5bln JLM interest)
- ISIN: EU000A3K4EU0
For both
- Settlement: 18 February 2025 (T+5)
- JLMs: Citi / DB / HSBC / Morgan Stanley (B&D/DM) / Societe Generale
- Timing: Books to close at 10:00GMT / 11:00CET, pricing later today
