Market Mover - BNP PARIBAS - Investment Services India

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Key Data Preview Chart 15: US Leading Indicators Suggest Growth Source: Reuters EcoWin Pro Jan (f) Dec Nov Oct Lead Index (% m/m) 0.6 1.1 1.0 0.3 6-mo. ann. chg. (%) 10.0 10.8 10.2 11.0 BNP Paribas Forecast: A More Modest Gain US: Leading Indicators (January) Release Date: Thursday 18 February The index of leading indicators is expected to rise 0.6% in January after surging 1.1% in December. Our forecast would suggest a slight cooling in the 6-month annualised rate to 10.0% from 10.8% in December. This is line with the deceleration we anticipate in GDP growth to 2.4% q/q saar in Q1 from 5.7% in Q4. The index will be influenced by a number of cross currents; the decline in the stock market and a backing up in initial jobless claims will weigh on the index while an increase in the ISM index of supplier deliveries, a still-steep yield curve, an improvement in consumers’ assessments of future conditions and a modest rise in building permits will be positive factors that keep the index rising overall. Key Point: A more modest gain in the index of leading indicators is expected in January. Chart 16: Canadian Inflation BNP Paribas Forecast: Increase Canada: CPI (January) Release Date: Thursday 18 February Source: Reuters EcoWin Pro m/m % Jan (f) Dec Nov Oct CPI 0.3 -0.3 0.5 -0.1 Bank of Canada Core 0.2 -0.3 0.4 0.1 Key Point: Higher gasoline prices, a rebound in clothing prices and mounting pressures on shelter costs suggest Canadian CPI inflation will increase by 0.3% m/m in January. Canadian CPI inflation is forecast to increase by 0.3% m/m in January. Because headline CPI declined by 0.3% m/m in January 2009, large base effects will push the headline index up by 1.9% on a year-on-year basis, marking the highest reading in over a year. Strength should be driven by gasoline prices, which are forecast to have increased by 3.0% m/m. Additional upward pressures should come from clothing prices. In December, clothing prices plunged by 4.7% m/m, the largest monthly decline for this month in the series’ 60-year history. Given that large discounts during the holiday shopping season tend to be followed by higher prices earlier in the year, we expect apparel prices to increase by 1.0% m/m in January. Shelter prices are expected to increase by 0.2%, reflecting an up-tick in household energy costs and recent increases in house prices (which feed into the CPI index directly through their effect of the CPI replacement component). Excluding the eight most volatile components and the effect of indirect taxes, the Bank of Canada core CPI is expected to increase 0.2% m/m in January. Base effects will play a very large role as the core CPI index declined by 0.4% m/m in January 2009. As a result, we expect core inflation to jump to 2.1% y/y in January from 1.5% previously. Market Economics 12 February 2010 Market Mover 54 www.GlobalMarkets.bnpparibas.com
Key Data Preview Chart 17: UK Retail Sales vs BRC Retail Sales Monitor Source: Reuters EcoWin Pro Jan (f) Dec Nov Oct % m/m -0.6 0.3 -0.3 0.5 % y/y 1.0 2.1 2.7 3.5 % 3m/3m 0.2 0.7 0.7 1.1 % 3m/yr 1.9 2.7 3.0 2.8 Key Point: We expect a weather-induced contraction in retail sales in January. BNP Paribas Forecast: Weather distortion UK: Retail Sales (December) Release Date: Friday 19 February We expect UK retail sales to post a 0.6 percentage point contraction in January, heavily influenced by the weather. More specifically, the worst snowfall in decades brought many parts of the country to a standstill. This will have physically prevented consumers from getting to the shops. There is also the possibility that the VAT hike may have acted as a drag on spending. Survey indicators have been pretty poor indicators of official retail sales in recent months. Nonetheless, for what it is worth, both the CBI and BRC gauges of high street spending suffered setbacks in January. The accompanying commentary attributed this to the poor weather. December’s retail sales data were disappointing despite upbeat survey indications. We suspect that less generous than usual discounting was responsible. In turn, this is likely to have reflected cautious Christmas inventory management, restricting the need to slash prices. If this is the case, it is also likely to have suppressed retail sales growth during January. Overall, we expect a weather-distorted reading. The flipside is that February’s data are likely to enjoy a bounce following the big thaw. 30 20 10 0 -10 -20 -30 -40 -50 -60 -70 -80 Chart 18: French Industrial Survey Own Production Outlook General Production Outlook Composite Indicator (RHS) 01 02 03 04 05 06 07 08 09 Source: Reuters EcoWin Pro 115 110 105 100 95 90 85 80 75 70 65 SA Feb (f) Jan 10 Dec Feb 09 Composite index 93 92 88 70 Overall Manuf. Outlook -4 -4 -11 -76 Own Manuf. Outlook -6 -9 -8 -46 Key Point: The financial markets turmoil may weigh on business confidence, but should not affect the INSEE industrial survey too heavily. BNP Paribas Forecast: Smaller Gain France: Monthly Industrial Survey (February) Release Date: Friday 19 February After a correction at the end of 2009, industrial confidence, according to the monthly INSEE survey, started to recover in January. The correction was stronger for the own production average and the recovery has not yet started, while the general outlook has performed better. Looking at other business surveys for France, it is notable that PMIs have either stabilised (for manufacturing) or declined (for services) over the last few months, while Bank of France and European Commission surveys are still on a rising trend. This difference may be explained by the fact that PMIs have been above their long-term average since last summer while the two others only reached this level in December. We believe the own production outlook should recover, while the general perception should stabilise. The former should be supported by the higher orders already reported in January survey, while the latter sub-index may suffer from the general economic uncertainties. Clearly, the very poor equity market performance and the turmoil seen on the bond market during the first week of February are a threat to business confidence. However, we believe that the INSEE industrial survey should not be overly affected. Market Economics 12 February 2010 Market Mover 55 www.GlobalMarkets.bnpparibas.com
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Market Economics | Interest Rate St
Page 3 and 4: gave a few specific details on the
Page 5 and 6: More clarity was given on the seque
Page 7 and 8: Sovereign Debt: Time for Europe to
Page 9 and 10: The PS is more likely to face in th
Page 11 and 12: outlook for GDP and inflation. So h
Page 13 and 14: On inflation, Riksbank’s language
Page 15 and 16: Spending on other areas never did i
Page 17 and 18: would argue that resolving this iss
Page 19 and 20: Ramifications for Rates, Swap Sprea
Page 21 and 22: EUR: Demand for ECB’s Liquidity S
Page 23 and 24: EUR: Peripheral ASW Curves Re-Steep
Page 25 and 26: JGBs: Wait for Price Dips in Q2 •
Page 27 and 28: Table 1: BNP Paribas' Inflation For
Page 29 and 30: Table 3: BNP Paribas' Inflation For
Page 31 and 32: Table 1: BNP Paribas Carry Analysis
Page 33 and 34: Update on curves 5/10y indices’ c
Page 35 and 36: Technical Analysis - Interest Rates
Page 37 and 38: Trade Reviews Options, Money Market
Page 39 and 40: leave the euro significantly lower.
Page 41 and 42: open for further measures if requir
Page 43 and 44: EUR/SEK has broken sharply lower th
Page 45 and 46: Economic Calendar: 12 - 19 February
Page 47 and 48: Key Data Preview 115 105 95 85 75 6
Page 49 and 50: Key Data Preview Chart 5: Italian G
Page 51 and 52: Key Data Preview Source: Reuters Ec
Page 53: Key Data Preview Chart 13: Norwegia
Page 57 and 58: Economic Calendar: 15 February - 12
Page 59 and 60: Next week's T-Bills Supply Date Cou
Page 61 and 62: Economic Forecasts GDP Year 2009 20
Page 63 and 64: Market Coverage Market Economics Pa
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Market Mover - BNP PARIBAS - Investment Services India

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