EMISSIONS: UKAs Track Weekly Gains On Potential EU-UK ETS Link Progress
UKAs Dec25 are on track for 4.7% weekly gains amid the strong upticks in the prior sessions, following the news reported that the EU and UK are near agreeing a temporary deal sparing UK businesses from the EU’s CBAM, targeting to finalise by the next EU-UK summit. The rally was driven by the interpretation of a progress on EU-UK ETS link.
- UKA DEC 25 up 0.8% at 56.75 GBP/t CO2e
- NBP Gas NOV 25 down 1.2% at 79.32 GBp/therm
- FTSE 100 DEC 25 up 0.3% at 9504
- ICE UKA futures daily aggregate traded volume stood at 3,955 contracts in the previous session, up 75.28% compared with the 30-day average.
- The EUA Dec25 premium to the UK equivalent remained at a similar level at €12.61/t CO2e.
- Correlation between EUA/UKA for 30-day period at 0.82.
- Correlation between UKA/FTSE100 for 30-day period at -0.02.
- Correlation between UKA/TTF for 30-day period at 0.38.
- UK gas demand, including power generation and exports, is forecast at 144 mcm/d, below the five-year average, according to National Grid.
- UK wind output is anticipated to be on a general downward trend from 5 October, reaching as low as a 14% load factor over 10-11 October.
- The latest month-ahead ECMWF weather forecast for NWE has been revised-up until 13 Oct and remained below average for most days.
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RATINGS: Bank Of America Look Into Eurozone Rating Risks
Bank of America note that “even if market expectations on Eurozone member states' GDP growth and public deficit have generally deteriorated (using Bloomberg consensus for ‘26 as a discriminator), the current rating agency guidance remains relatively balanced on the likelihood of upgrades or downgrades”.
- The believe that “on the side of upgrades, Ireland, Spain, Portugal and Italy are biased for upgrades, while Austria (perhaps in 2026), Belgium and France risk downgrades”.
GILT TECHS: (Z5) Bear Cycle Intact
- RES 4: 92.06 High Aug 14
- RES 3: 91.45 High Aug 15
- RES 2: 91.24 High Aug 18 and a key near-term resistance
- RES 1: 90.16/90.84 High Sep 2 / High Aug 28 / 29
- PRICE: 89.49 @ 08:22 BST Sep 3
- SUP 1: 89.42 Intraday low
- SUP 2: 89.22 1.618 proj of the Aug 21 - 27 - 28 price swing
- SUP 3: 89.00 Round number support
- SUP 4: 88.84 2.00 proj of the Aug 21 - 27 - 28 price swing
A bear cycle in Gilt futures remains in play and a fresh cycle low again on Tuesday reinforces current conditions.The contract has started today’s session on another bearish note. The continuation of the bear leg has resulted in a break of the 90.00 handle. Clearance of this level strengthens the downtrend. Sights are on 89.34 next, a Fibonacci projection. Initial firm resistance is at 90.84, the Aug 28 and 29 high.
GILTS: 30-Year Yields Near Next Upside Level
UK 30-Year yields have again hit the highest level since the late ‘90s, 5.735%. Moving average studies further underscore the bearish trend in long end UK paper/uptrend in yields. The 1.236 Fibonacci projection of the Jun 13-Jul 18-Aug 5 price swing nears (5.74%). The next projection of that move above there lies at 5.79%.
