Eco Analysis - Energy prices to put upward pressure on French inflation in December and January (M. Martinez)

Eco Analysis - Energy prices to put upward pressure on French inflation in December and January (M. Martinez)

Energy prices to put upward pressure on French inflation in December and January
French inflation gauges have been slowing down since the beginning of the year. After another drop in annual rates in November, we expect this trend to break in January, owing mainly to an increase in energy and food prices. Indeed, energy prices have been constrained by the government over past months, but are likely to catch up in December and January. We expect FRCPIxt to rise by 1.75% yoy in the first two months of 2013.

■ Excise duties on gasoline prices to rise progressively

Following up on a promise made by François Hollande during his presidential campaign, excise duties on fuels (TICPE) were temporary reduced by €3ct per litre between 29 August and 30 November. At the same time, gasoline retailers matched the price cut, leading to an average reduction of €6ct per litre. Last week, the government announced that the return to normal TICPE excise duties will occur in four stages, beginning with a €1ct hike on 1 December, followed by €½ct on 11 December, €½ct on 21 December and lastly €1ct on 11 January. We expect gasoline prices to gradually increase by €6ct during this period. The cumulated impact on headline inflation in December and January is estimated at 20-25bp.

■ Gas prices to rise by 3.0% on 1 January.

Gas tariffs are administered by the government in France. Household tariffs increased by 2% in October, as the government apparently ignored the recommendation of the French energy regulator (Commission de regulation de l'énergie, CRE) which estimated that prices should be increased by 6.1%. As a result, ANODE, the French gas suppliers association, took the French government to court, and subsequently, on 29 November, the Conseil d'Etat (Counsel of State) which hears cases against decisions made by the government, ruled in favour of ANODE. On 10 December, the government is to announce the official hike, which is to take effect on 1 January. We expect the hike to be close to 3.0% which translates into a 3bp hike in headline inflation.

■ Food prices to grow in line with average seasonality

We expect food prices to increase by 1.0% over the next three months (November to January), thereby adding 15bp to the headline figures, representing the average observed over the last 10 winters (from November to January). In actual fact, food prices grew at a slower pace (0.6%) between November 2011 and January 2012. However, we believe the summer surge in global agricultural prices is likely to have exerted upward pressure.

■ French inflation to slow down in 2013 and accelerate in 2014

On a different note, household and motor insurance tariffs are set to increase by 2.0-3.0bp in January (adding 3bp to headline figures). Assuming an average seasonal profile for other core prices, we expect French inflation (FRCPIxt) to print at 1.75% yoy in January. Looking ahead, we expect French HICP inflation to grow at 1.9% yoy in 2013 and 2.4% yoy in 2014. As part of our central scenario, we take into account the VAT hike in January 2014 (see PM Ayrault sends positive signals on competitiveness). Note that our monthly inflation forecasts are available on Bloomberg (function SXEI).

MARTINEZ Michel

Ukraine: S&P downgraded Ukraine's rating by one notch to B (negative outlook)

Ukraine: S&P downgraded Ukraine's rating by one notch to B (negative outlook)

Today S&P downgraded Ukraine's rating by one notch to B (negative outlook). Previously this week, the country's rating was downgraded by Moody's. The main concern is clear: the country is scheduled to redeem USD7.2bn in 2013 while sources of refinancing are still uncertain. We reiterate our call that the new deal with the IMF is essential for financial and economic stability in the short term. We expect more efforts of the government to reach a compromise with the fund. However, the mission visit has been recently postponed to the beginning of 2013 when the new government is supposed to be formed. We maintain our call on economic recession in the coming quarters and hryvnya deval to UAH9 per $ in the near future.

U.S. Commercial, Multifamily Mortgage Delinquency Rates Dip in 3Q

World Property Channel

U.S. Commercial, Multifamily Mortgage Delinquency Rates Dip in 3Q
Posted by David Barley 12/07/12 8:00 AM EST

According to the Mortgage Bankers Association's (MBA) Commercial/Multifamily Delinquency Report, delinquency rates decreased for commercial and multifamily mortgage loans in the third quarter.

Chile: We expect consumer prices to have inched down modestly in November

Florencia Vazquez,Gustavo Arruda,Marcelo Carvalho,Nader Nazmi - Market Economics
Daily Latam Spotlight | 07 Dec 2012 06:00 |

Chile: We expect consumer prices to have inched down modestly in November.

CHILE

We expect modest deflation in November. The report will be unveiled today. After an upside surprise in October, consumer price inflation is expected to have dived into negative terrain in November. The m/m decline is estimated to be modest, though. We look for a negative print smaller than 0.1% in absolute terms. If the forecast materializes, the y/y inflation rate would have declined to 2.5% last month. The median estimate from the Bloomberg survey expects consumer prices to have remained unchanged last month. The consensus y/y rate expectation is 2.6%.

Eco Analysis - Australia: Big trade deficit, but also better exports (K Baader)

Eco Analysis - Australia: Big trade deficit, but also better exports (K Baader)

Australia's October trade figures added another piece of evidence that intra-Asian trade - and arguably global trade - is picking up. Export values rose for the first time in five months, albeit by a mere 0.4% mom, but that is a respectable performance considering that, according to the RBA measure, commodity prices were down 2.2% in October. The rise owed much to a jump in exports to China, which surged 20% mom (but caution, not seasonally adjusted), lifting the annual rate to -11% from -25%. This supports the notion that de-stocking in China has come to an end. Meanwhile, imports into Australia surged, led by capital goods, indicating that strong investment activity extended into Q4.

Top 10 Investor Questions For 2013: Global Real Estate

Top 10 Investor Questions For 2013: Global Real Estate
05-Dec-2012

How does the prospect of a slow U.S. economic recovery affect Standard & Poor's Ratings Services' views on the credit quality of REITs and homebuilders in this market?How does Standard & Poor's account for divergent economic trends in its financial performance forecasts for real estate companies in the Asia-Pacific region? What implications does the prevailing weak macroeconomic environment in Europe have for real estate ratings? What are Standard & Poor's views on the funding outlook for the U.S. real estate sector? What are the most notable debt capital market developments for real estate in the Asia-Pacific region? What are funding conditions like for real estate in Europe? What is your credit outlook for the main property sectors in the U.S.? What is your credit outlook for the main property sectors in Asia-Pacific? What is your credit outlook for Europe's retail and office property sectors?What are the likely prospects for M&A activity in the real estate sector across the three major regions? The global real estate sector is set to finish the year 2012 on a cautiously positive note. Capital real estate values have broadly remained stable, rated real estate investment trusts (REITs) are on track in terms of leasing activity, and most rated developers are seeing improved profitability. The funding environment for rated real estate has improved significantly since 2010-2011, and investor appetite for real estate debt is growing. We're also seeing real estate companies shift toward debt issuance and nonbank funding rather than bank debt--a trend that we believe will continue into 2013. We believe credit quality among our rated portfolio of real estate companies should remain stable into 2013. This is because our base-case operating scenarios for rated estate companies balance macroeconomic headwinds with firms' well-diversified, high quality portfolios.

S&P: Top 10 Investor Questions For 2013: Global Real Estate

New $15 Billion Hudson Yards Project Breaks Ground on Manhattan's West Side

World Property Channel

New $15 Billion Hudson Yards Project Breaks Ground on Manhattan's West Side
Posted by Hortense Leon 12/06/12 8:15 AM EST

A city within a city was launched on Tuesday of this week, when ground was broken for the first building in the approximately $15 billion mixed-use Hudson Yards development on the west side of Manhattan.

Chile: Growth cooled down further on a sequential basis in early Q4

Florencia Vazquez,Gustavo Arruda,Marcelo Carvalho,Nader Nazmi - Market Economics
Daily Latam Spotlight | 06 Dec 2012 06:00 |

Chile: Growth cooled down further on a sequential basis in early Q4.

CHILE

Growth cooled down further on a sequential basis in early Q4. The monthly proxy for real GDP, Imacec, was reported to have advanced a robust 6.7% y/y in October. This reading stood slightly ahead of our forecast and the median estimate from the Bloomberg survey (both: 6.2% y/y). On a three-month moving average basis, growth accelerated slightly to an above-potential 6.0% y/y.

U.S. Multi-Family Sector's Vacancy Rates Expected to Rise in 2013

World Property Channel

U.S. Multi-Family Sector's Vacancy Rates Expected to Rise in 2013
Posted by Hortense Leon 12/05/12 8:18 PM EST

Although the U.S. multi-housing vacancy rate is expected to go up in 2013, it will remain near the historic average.

Tesco US Exit Would End Losses, Allow UK Turnaround Focus

Fitchratings.com
05 Dec 2012 11:35 AM
Tesco US Exit Would End Losses, Allow UK Turnaround Focus

Fitch Ratings-London-05 December 2012: A withdrawal from the US would benefit Tesco's financial profile by halting several more years of operating losses and would allow the retailer to focus on addressing more pressing issues in its home market, Fitch Ratings says. Early expectations for growth from the US business quickly proved over-optimistic, especially as it was launched just before the economic downturn. Still a withdrawal would leave the group's European and Asian operations as the only source of international diversification.