At this point it's obvious to everyone that the only way that Russia will increase pipeline flows is if it gets sanctions relief. The games around Nord Stream 1 continue and there's no relief coming.
We saw two spikes in TTF gas prices last winter but those were both on cold weather and were ultimately short-lived events. This time, it's not weather or a short-term disruption. Gas-burning season is still months away and prospects are darkening.
At this point, the story isn't really 'new' to anyone but 2022 and 2023 bottom-up EPS forecasts for the MSCI Europe index have barely moved. That's a sign that analysts (and perhaps investors?) are holding out hope that the taps will be turned back on.
Meanwhile, what's staring right back at them are catastrophically high German power prices.
Keep in mind that German markets are some of the worst year-to-date performers (-29%) and the euro has been battered but economic models do a poor job of incorporating something so unusual as a 5x increase in power prices.
The euro this week looked like it might be entering a retracement phase early yesterday as it rose to a one-month high but by the end of the day it had reversed lower. That's a bearish signal but it will take a break of 1.0097 to confirm it (the late-July low). That could come with the Fed pushing expected rate hikes higher or the ECB backing off on hawkish rhetoric.
