Gas and electricity prices continue to soar
The last few months have consistently seen European economic data surprise to the upside but a looming drag is on the horizon.
Natural gas prices are absolutely soaring and continued higher today.
Prices for power are 2-8% higher across Europe today and up around 70% year-to-date. These are record or near-record prices everywhere and we're nowhere near peak winter demand. In the UK, it's even worse with prices above £200 per MWh. There's even talk of baseload prices at £354 compared to the average of £45 from 2010-2020.
The natural gas market is grim, with TTF benchmark prices up another 5% to a fresh record, having gained 20% since the start of the month.
These costs are undoubtedly going to dig into consumer spending in the months ahead. Moreover, they're a major political risk and I expect we'll see all kinds of interventions into markets.
There's hope that Nord Stream 2 can stem the gas shortage but with Russian inventories also low and time running out, I struggle to see it.
Follow Javier Blas for more charts on just how extreme this is getting. This almost feels like sleepwalking into a crisis and no one is even talking about it.
