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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
EUROPE
Euro and Sterling remain under pressure this morning amid continued macroeconomic headwinds, many of which stem from soaring energy prices. German baseload electricity 1-year forward prices (EUR/Mwh) (chart below) provide one of the more frightening charts out there right now, up 10+% today and 650% Y/Y.
- A few other selected headlines from this morning:
- EUROPEAN GAS PRICES SURGE AS MUCH AS 10% TO EU269.50/MWH -bbg
- EUROPEAN COAL FOR NEXT YEAR RISES 5.1% TO RECORD $335/TON -bbg
- NORDIC NEXT-YEAR POWER JUMPS 7.3% TO RECORD EU195/MWH -bbg
- Some of these headlines represent near-term/idiosyncratic factors - our Commodities team points out that Nord Stream maintenance is expected for 3 days on Aug 31, and there is currently an unplanned gas outage in Norway.
- But the broader picture is that there is an economic pincer movement underway between higher Russia-Ukraine war-related energy prices squeezing the European private sector as a whole, and China growth weakness (highlighted by the PBOC LPR cuts overnight) adding to pressure on eurozone exporters.
- While it could be argued that this dynamic has been substantially priced in already, upside in energy/power prices and China economic weakness look like they have been underestimated. That suggests potential for continued stagflationary pressures on European assets, with FX seeming to bear the burden.
Source: BBG, MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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