28 September 2012
Last week saw carbon experience broadly negative correlations with almost everything else in the market due to carbon-specific news and other markets being affected by macroeconomic sentiment. This week, however, carbon returned to its old habits and experienced strong correlations with the energy complex. Although there was a strong positive correlation with coal prices, this really resulted from the strong correlation between power and coal, with the DDS correlation slightly lower, though still significant. Broader economic fears seemed not to be influencing carbon as Stoxx 50 and Bunds correlations with the energy complex were very low. Despite news suggesting that the European Commission would be releasing a report on the carbon market in November, which it may try to use to justify any future back-loading of EUA auctions, the correlations show than fundamentals provided the majority of the boost.