MARKET MOVER - BNP PARIBAS - Investment Services India

Key Data Preview
Chart 11: US Durable Goods Orders vs Shipments
(% 3m/3m saar)
40
20
0
-20
-40
-60
% 3m/3m ar
Core Shipments
Core Capital Goods Orders
Feb 01 Feb 03 Feb 05 Feb 07 Feb 09 Feb 11
Sources: Reuters EcoWin Pro
% m/m Aug (f) Jul Jun May
Durable Goods -4.9 4.1 1.6 1.5
Ex-Transport 0.1 -0.6 -2.2 0.7
Core Cap Goods Ship -1.0 -0.5 1.4 1.0
BNP Paribas Forecast: A Boeing Drop
US: Durable Goods (August)
Release Date: Thursday 27 September
Durable goods orders are expected to fall by 4.9% m/m in
August, as Boeing orders totalled a whopping 1 order for the
month, after an impressive 260 in the prior month. Boeing
orders had been a source of strength previously, averaging
164.6 orders from November to March; however, with just 36
orders accumulated between April and June, that strength
looked to have been fading until the July pop. We will look
closely at the trend over the coming months. Meanwhile,
excluding transportation, orders should be decent with a
0.1% m/m gain for August, although the 3m/3m saar trend is
expected to contract at a 9.1% pace in the month.
Core capital goods shipments (shipments ex-defence and
aircraft) are expected to decline by 1.0% in an atypical
second month of the quarter, however, moving in line the 3m
trend in core capital goods orders. In all, we see the pace of
shipments slowing in Q3, although still contributing positively
to GDP growth, but with some significant risks that Q4 could
move into negative territory.
Key Point:
In August, just one Boeing order came in for the month,
which is expected to drag the headline print into
negative territory. Meanwhile, core capital goods
shipments are expected to be in line with the negative
trend in core orders.
3
2
1
0
-1
-2
-3
Chart 12: Japanese Core CPI (% y/y)
CPI excluding energy and
food, but not alcohol
Core CPI
05 06 07 08 09 10 11 12
Sources: MIC, BNP Paribas
% y/y Aug (f) Jul Jun May
Core CPI -0.3 -0.3 -0.2 -0.1
CPI -0.6 -0.4 -0.2 0.2
Key Point:
With petroleum product inflation decelerating on the
drop in crude oil prices in May and June, we expect core
CPI to have remained soft through August.
BNP Paribas Forecast: Slight Decline
Japan: CPI (National, August)
Release Date: Friday 28 September
Based on the Tokyo CPI report for August, and after making
allowances for its disparities with other areas, we estimate
that national core CPI inflation in August should have
remained unchanged from July at -0.3% y/y. In July, the
index’s rate of decline expanded 0.1pp from June, as the
drop in the crude oil price in May and June caused price
growth for petroleum products to decelerate substantially.
While US-style core-core CPI inflation (excluding energy and
food, but not alcohol) was unchanged for a third straight
month at -0.6%, other price-trend indicators showed a
modest deterioration, including the “10% trimmed mean CPI”
(which excludes the top and bottom one-tenth of components
ranked by the size of year-on-year price changes), which has
been slightly below zero since May. But with energy prices
stabilising in August (the month-on-month declines ended)
thanks to higher electricity rates and the rebound in
petroleum product prices in July-August, we expect energy
prices at the national level to have risen in September,
allowing the core CPI to recover.
Market Economics 20 September 2012
Market Mover
50
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