MARKET MOVER - BNP PARIBAS - Investment Services India

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Key Data Preview 8 7 6 5 4 3 2 1 0 Chart 15: Eurozone HICP Inflation Frequency of revisions to flash estimate by 0.1pp or more since 2001 (to 1d.p.), by month Final higher than flash Final lower than flash Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Sources: Reuters EcoWin Pro Sep (f) Aug Jul Jun HICP All Items (% y/y) 2.6 2.6 2.4 2.4 HICP All Items (% m/m) 0.7 0.4 -0.1 0.1 Key Point: Tax effects should be broadly offsetting this month, and we expect no change to the headline rate. BNP Paribas Forecast: Stable Eurozone: HICP (September) Release Date: Friday 28 September Inflation accelerated across the eurozone in August, primarily as a result of rising fuel prices. The headline All Items rate ticked up to 2.6% y/y from 2.4%, a level it had stabilised at for the previous three months. Food price inflation was broadly unchanged, while core price inflation fell 0.2pp to 1.5% y/y: the first time core inflation had moderated since January. September is typically a strong month for core prices, although the balance of items going up in price versus those being discounted as summer makes way for autumn means greater potential for volatility and/or revisions of preliminary estimates (see chart). On the one hand, clothing prices should rise strongly as the sale of full-price autumn-winter stock gets underway. New furnishings and household goods should also boost core prices, as should annual educational fee increases. Acting to push inflation down will be holidayrelated goods and services, including airfares. An additional unknown this month is the Spanish VAT hike, which became effective on 1 September. Assuming that we see most of the expected pass-through in the September figures, we expect a 1.3pp boost to Spanish HICP inflation, which would add 0.2pp to eurozone All Items HICP inflation this month. This should broadly offset any downward pressure from the Italian VAT hike of the previous September dropping out of year-on-year comparisons, meaning core inflation spends a second month at 1.5% y/y. 115 110 105 100 95 Chart 16: French Retail Sales Breakdown Indices 2005=100 Food Cars Total Retail Sales Energy 90 Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan 08 09 10 11 12 Source: INSEE, Reuters EcoWin Pro Volume (sa-wda) Aug (f) Jul (f) Jun Aug 11 % m/m -1.5 0.3 0.1 0.5 % y/y -1.2 0.7 0.2 0.5 Key Point: Average sales for July and August are likely to be weak. BNP Paribas Forecast: Weak France: Retail Sales (July and August) Release Date: Friday 28 September As they are every year, French retail sales data for July and August will be published together, as the data are collected simultaneously in September. This should provide us with a major piece of information for the Q3 GDP outlook on the day when the revised growth data for Q2 are released (we expect a downward revision from unchanged to -0.1% q/q). The unpredictable weather, cold and rainy in July, warm and sunny in August, may have caused some volatility in the consumption of food and energy. The cut in taxes on petrol may also have prompted some people to postpone refuelling their cars until early September. Car registrations were poor in both months, continuing the trend we have seen since the start of the year. The Bank of France's retailer survey suggests that demand for manufactured goods was relatively strong in July, but very weak in August, as people were keener to hit the shopping malls on rainy days. Our forecast reflects this evolution, with a gain in July followed by a collapse in August. For a fair assessment of the economic situation, we should look at the average of the two months, and this is likely to be weak, probably below the 2011 average. Market Economics 20 September 2012 Market Mover 52 www.GlobalMarkets.bnpparibas.com
Key Data Preview 7000 6500 6000 5500 5000 4500 Chart 17: US Real PCE Services Real Consumer Spending on Services (USD bn) 4000 95 95 96 97 98 99 00 01 02 03 04 05 06 06 07 08 09 10 11 Sources: Reuters EcoWin Pro % m/m Aug (f) Jul Jun May Personal Income 0.2 0.3 0.3 0.3 Consumption 0.3 0.4 0.0 -0.2 Core PCE Prices 0.1 0.0 0.2 0.1 Key Point: Nominal consumer spending should post a moderate increase in August on higher energy prices. Real spending and core inflation should be weak. BNP Paribas Forecast: Subdued Gain in Spending US: Personal Income & Spending (August) Release Date: Friday 28 September Nominal personal spending is expected to register a 0.3% gain in August, driven by higher energy prices. Meanwhile, real spending is expected to post a small decline. Auto sales posted a solid gain in August; however, virtually every other category of spending should be weak. Core retail sales fell back in August, and utility output plunged, which should weigh on services spending. The projected weakness in August comes after a solid 0.4% gain in July, and on balance, consumer spending is expected to grow moderately in Q2 Personal income is forecast to increase 0.2% in August after rising 0.3% in July. Hours worked grew a modest 0.1%, and average hourly earnings were essentially flat, pointing to a subdued increase in wage income. With income growing just a touch slower than spending, the personal savings rate should post a small decline in the month. We think that the headline PCE deflator will rise 0.4%, on higher gas prices, pushing the annual pace to rise to 1.5% from 1.3%. Meanwhile, core inflation is expected to rise 0.1%, with the annual pace edging down to 1.5% from 1.6%. This cooling in core pricing should further increase the Fed’s confidence that there are few indications of incipient inflation pressures. Market Economics 20 September 2012 Market Mover 53 www.GlobalMarkets.bnpparibas.com
Page 1 and 2: Market Economics | Interest Rate St
Page 3 and 4: Spain set to present its new budget
Page 5 and 6: The methodology All of the above in
Page 7 and 8: Ireland: What to Expect When You Ar
Page 9 and 10: Spain: Inching Closer to a Request
Page 11 and 12: UK Inflation: No Pressure • UK in
Page 13 and 14: US Housing: New Channels for Policy
Page 15 and 16: Japan: The Eastern Fiscal Cliff •
Page 17 and 18: an agreement that all budget-relate
Page 19 and 20: This section is classified as non-o
Page 33 and 34: Table 1: BNP Paribas' Inflation For
Page 35 and 36: Table 3: BNP Paribas' Inflation For
Page 43 and 44: Economic Calendar: 21 - 28 Sep (con
Page 45 and 46: Key Data Preview Chart 1: UK Cumula
Page 47 and 48: Key Data Preview Chart 5: German He
Page 49 and 50: Key Data Preview Chart 9: German ES
Page 51: Key Data Preview Chart 13: Japanese
Page 55 and 56: Treasury and SAS Issuance Calendar
Page 57 and 58: Central Bank Watch Interest Rate EU
Page 61: For Production and Distribution, pl

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