EMISSIONS: UKAs Speculators Grow Bullish Bets To 13-Week High
Investment funds grew net long positions in UK ETS futures on the ICE exchange as of 22 August, to the highest level since mid-May, hitting a 13-week high, according to the latest COT data.
- Investment Funds net long positions increased by 823, or 4.65%, to +18,526.
- Investment Firms net short positions increased by 2,225, or 4.05%, to -57,220.
- Commercial Undertakings net long positions increased by 1,555, or 4.82%, to +33,822.
- UKAs Dec25 posted a net weekly gain of 2.74% as of 22 Aug, supported by 2.62% and 8% gains in EUAs and TTF respectively, with the correlation between UKAs and both markets tightening to a similar level at above 0.50.
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GILTS: /STIR: Goldman Hold Long SONIA Vs Euribor, Eye On QT & Reduced Gilt Risk
Goldman Sachs note that “despite the previous week’s inflationary speed bump, the UK curve outperformed last week, as soggy activity data insulated gilts from bearish price action in other markets. This muted spillover points to the continuing calming in UK-specific risk premium that had been a feature of UK macro assets in recent years. As inflation risk subsides, the half-life of bouts of gilt volatility seems to be shrinking”.
- They go on to suggest that gilts should “get additional support as the BoE slows the pace of QT from October onwards. Although the pace of active sales picks up in our forecasts, we expect the BoE to skew away from long-end sales. As a result, we maintain our constructive GBP vs EUR rates and continue to recommend long SFIZ6 vs. ERZ6”.
EQUITIES: Estoxx outright Put Buyer
SX5E (15th Aug) 4900p, bought for 4.70 in ~8.4k.
US TSY OPTIONS: Weekly TY Option
TY Weekly Option, Friday NFP Expiry:
- TY 111p, bought for '22 in ~5.11k.
