Market Economics | Interest Rate Strategy - BNP PARIBAS ...

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Economic Calendar: 21 - 28 January (cont) GMT Local Previous Forecast Consensus Thu 27/01 10:00 11:00 Eurozone Economic Sentiment : Jan 106.2 106.4 106.9 (cont) 10:00 11:00 Industry Sentiment : Jan 4.0 5.0 4.5 10:00 11:00 Consumer Sentiment : Jan -11 -11 n/a 10:30 11:30 ECB’s Bini Smaghi Speaks in Bologna 18:00 19:00 ECB’s Tumpel Gugerell Speaks in Mainz, Germany 10:15 11:15 Belgium CPI m/m : Jan 0.4% 0.2% n/a 10:15 11:15 CPI y/y : Jan 3.1% 2.9% n/a 11:00 11:00 UK CBI Distributive Trades Survey : Jan Germany States’ Cost of Living m/m : Jan 1.0% -0.5% -0.2% States’ Cost of Living y/y : Jan 1.7% 1.8% 2.1% HICP (Prel) m/m : Jan 1.2% -0.5% -0.3% HICP (Prel) y/y : Jan 1.9% 2.0% 2.3% 13:30 08:30 US Durable Goods Orders m/m : Dec -0.3% 2.1% 1.5% 13:30 08:30 Initial Claims 404k 425k 410k 15:00 10:00 Pending Home Sales : Nov Fri 28/01 23:30 08:30 Japan CPI National y/y : Dec 0.1% -0.1% -0.2% 23:30 08:30 Core CPI National y/y : Dec -0.5% -0.5% -0.5% 23:30 08:30 CPI Tokyo y/y : Jan -0.2% 0.1% -0.2% 23:30 08:30 Core CPI Tokyo y/y : Jan -0.4% -0.2% -0.3% 23:30 08:30 Household Consumption y/y : Dec -0.4% -0.1% -0.7% 23:30 08:30 Unemployment Rate (sa) : Dec 5.1% 5.1% 5.1% (27/01) BoJ Minutes 08:00 09:00 Spain Unemployment Rate : Q4 19.8% 20.1% n/a 08:00 09:00 Norway Unemployment Rate (nsa) : Jan 2.7% 2.7% n/a 08:30 09:30 Eurozone Eurocoin : Jan 09:00 10:00 M3 y/y : Dec 1.9% 2.0% 2.0% 09:00 10:00 M3 y/y (3-Mth) : Dec 1.3% 1.6% 1.6% 09:00 10:00 Bank Lending y/y : Dec 2.0% 2.3% n/a 09:10 10:10 Retail PMI : Jan 52.9 53.2 n/a 08:30 09:30 Sweden Retail Sales (sa) m/m : Dec 0.1% 0.3% n/a 08:30 09:30 Retail Sales (nsa) y/y : Dec 5.3% 5.0% n/a 08:30 09:30 Italy ISAE Consumer Confidence : Jan 109.1 108.6 108.9 09:00 10:00 Wages m/m : Dec 0.2% 0.0% n/a 09:00 10:00 Wages y/y : Dec 1.7% 1.6% n/a 10:30 11:30 Switzerland KOF Leading Indicator : Jan 2.10 2.05 n/a 13:30 08:30 US GDP (Adv, saar) q/q : Q4 2.6% 2.9% 3.4% 13:30 08:30 GDP Deflator (Adv, saar) q/q : Q4 2.1% 1.5% 1.7% 13:30 08:30 Employment Cost Index q/q : Q4 0.4% 0.5% 0.5% 13:30 08:30 Employment Cost Index y/y : Q4 1.9% 2.0% n/a 14:55 09:55 Michigan Sentiment (Final) : Jan 72.7 (p) 73.5 73.0 During 27/1-4/2 Germany Import Prices m/m : Dec 1.2% 1.0% 1.0% Week Import Prices y/y : Dec 10.0% 10.6% 10.6% 27-31 UK Nationwide House Prices Index m/m : Jan 0.4% -0.5% n/a Nationwide House Prices Index y/y : Jan 0.4% -1.1% n/a Release dates and forecasts as at c.o.b. prior to the date of publication: See Daily Economic Spotlight for any revision Source: BNP Paribas Market Economics 20 January 2011 Market Mover 70 www.GlobalMarkets.bnpparibas.com
Key Data Preview 120 115 110 105 100 95 90 85 80 Chart 1: German Ifo Business Climate Expectations (4-Mth Lag) Current Conditions 75 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 Source: Reuters EcoWin Pro Jan (f) Dec Nov Oct Headline 110.9 109.9 109.3 107.7 Expectations 107.9 106.9 106.3 105.2 Current Conditions 113.9 112.9 112.3 110.2 Key Point: Sentiment will remain elevated, with the economic expansion broadening out. BNP Paribas Forecast: Stronger for Longer Germany: Ifo Business Climate (January) Release Date: Friday 21 January Ifo’s business climate index climbed for the seventh month in succession in December, rising above its high point during the previous expansion of 2005-2008. The sub-indices measuring current business conditions and future expectations both improved, with the former at an exceptionally elevated level (see chart). The assessment of current business conditions in Germany is still a little short of its cycle high in 2006 (115.5) and we expect a further improvement in December. The improvement in Ifo’s sentiment surveys was initially due to the exceptional strength in the manufacturing and export sectors but domestic sectors, including retail, have also shown a pronounced improvement more recently. The business climate index for the retail sector has risen to its strongest level since the early 1990s. Survey participants have signalled a moderation in the rate of externally driven growth relative to the spring peaks but domestic demand is taking up the baton. The latest round of hard activity data has been strong in Germany, with industrial orders recording one of the largest increases on record in November. This points to a further pick-up in expectations. Chart 2: UK Retail Sales vs RICS Sales to Stocks Source: Reuters EcoWin Pro Dec (f) Nov Oct Sep % m/m -2.0 0.3 0.7 -0.5 % y/y -0.8 1.1 0.4 0.3 % 3m/3m -0.1 0.2 0.5 1.1 % 3m/yr 0.2 0.6 0.6 0.8 Key Point: We expect retail sales to show an initial fall of 2% m/m, with the risk of a downward revision at a later stage. BNP Paribas Forecast: Sharp Fall UK: Retail Sales (December) Release Date: Friday 21 January We expect UK retail sales to fall by 2% m/m in December, largely due to snow-related disruption. The coldest December on record and widespread snow prevented shoppers from getting to the high street and deliveries to stores. As a guide, the last time there was disruption of this nature (January 2010), the initial estimate of retail sales was for a 1.2% m/m fall. This was subsequently revised down to a decline of over 3% m/m. We suspect a similar outcome is likely this time round. Within the breakdown, clothing sales are likely to perform well given the experience of January 2010 and anecdotal reports – not least from the BRC retail sales monitor. Meanwhile, the headline measure also includes auto fuel sales. These plunged by 8.5% m/m in January 2010 as fewer road journeys were made. Given the proximity to Christmas and the likelihood that travel plans were abandoned, we expect this component to fall by at least as much. The bottom line is there is likely to be a sizeable fall that will be vulnerable to revision. Further, the fall is likely to be temporary and a bounce back to some extent the following month is likely. We suspect that the VAT hike in January will mean the bounce is rather muted. Market Economics 20 January 2011 Market Mover 71 www.GlobalMarkets.bnpparibas.com
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Market Economics | Interest Rate St
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The obvious focal point is the Summ
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such shocks at the moment, such as
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US monetary conditions, because the
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Chart 9: Asia- Ifo Expected Inflati
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President Bullard was generally sup
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Canada: Betting on Investment and E
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Eurozone Inflation: Forecast Revisi
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optimism on Germany, in last week
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Page 23 and 24: households. Furthermore, the statis
Page 25 and 26: Norway: Norges Bank Preview • We
Page 27 and 28: Japan: New Cabinet and Policy Outlo
Page 29 and 30: Japan: Capex Outlook • Core machi
Page 31 and 32: US/EUR Spreads: Further Tightening
Page 33 and 34: US: Could the Short End Have a Puls
Page 35 and 36: Trades with higher hit ratio and Sh
Page 37 and 38: ange bound, as we expect, given tha
Page 39 and 40: EUR: Liquidity is No Stress • The
Page 41 and 42: EMU Debt Monitor: Trade Ideas • K
Page 43 and 44: EMU Debt Monitor: CDS Analysis Char
Page 45 and 46: EMU Debt Monitor: Redemptions • O
Page 47 and 48: EUR: Buy 3m5y Straddle vs 3m10y Str
Page 49 and 50: Global Inflation Watch Eurozone HIC
Page 51 and 52: Table 2: BNP Paribas' Inflation For
Page 53 and 54: Inflation: With Supply Comes Opport
Page 55 and 56: Pricing Date Repo Rate Sett. Date T
Page 57 and 58: Germany 10y: MT 61.8% (3.12) break
Page 59 and 60: Travelling Asia • Inflation has e
Page 61 and 62: Capitalism requires business cycles
Page 63 and 64: EURUSD Rally Eyes 1.3750-1.3950 •
Page 65 and 66: Currency Spot Trade Recommendations
Page 67 and 68: than an unrelenting rise in prices
Page 69: Economic Calendar: 21 - 28 January
Page 73 and 74: Key Data Preview Chart 5: French Sa
Page 75 and 76: Key Data Preview 10 5 0 -5 -10 -15
Page 77 and 78: Key Data Preview 3 2 1 0 -1 Chart 1
Page 79 and 80: Economic Calendar: 31 Jan - 25 Feb
Page 81 and 82: Next Week's T-Bills Supply Date Cou
Page 83 and 84: Economic Forecasts GDP Year 2010 20
Page 85 and 86: Market Coverage Market Economics Pa
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