Barclays Capital - Risk marches on

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					RESEARCH | GLOBAL MACRO DAILY | NEW YORK OPEN                                                                       14 March 2012

Risk marches on
UPDATE: This version reflects India’s February inflation number which printed above        Market Insights and Events
consensus at 6.95% y/y.                                                                    Europe                               4
                                                                                           Asia Pacific                         5
   As we expected, the FOMC acknowledged the stronger data flow in the US and             North America                        6
    upgraded its assessment of the economic outlook (Full Story). In our view, the         EEMEA                                7
    statement further lowers the probability of additional monetary stimulus (we do
    not expect further easing this year). The Treasury curve continued its recent
                                                                                           The next 24 hours
    steepening trend (Full Story), while US equities held onto recent gains, and the
                                                                                           Europe                               8
    dollar strengthened.
                                                                                           Asia Pacific                         8
   The JPY appears to be the biggest loser in the recent bout of USD strength. Our        North America                        8
    strategists believe JPY underperformance is likely to continue, with USD/JPY           EEMEA                                8
    likely to reach 88 in 3m and 90 in 6m (previously 80 and 82, respectively). We         Latin America                        9
    recommend buying a 3m USD/JPY one-touch option struck at 88 to express our             Calendar                            10
    bullish USD/JPY view (Full Story).
                                                                                           Contacts                            12
   In our opinion, easy global monetary policy and a rebound in risk appetite are
    likely to be supportive of FX carry trades. However, we advise caution in
    choosing the carry currency, as stretched valuations and low levels of implied
    volatility suggest that markets might be a bit too complacent regarding the
    prospects for some currencies (see Focus on page 2).

   The latest incoming data have improved our tracking estimate for Q1 US GDP
    growth to 2.1%, against our published forecast of 2.5%. The February retail sales
    report included upward revisions to January data (Full Story) and, together with
    stronger inventory accumulation (Full Story), boosted our Q1 tracking estimate
    and investor sentiment ahead of the release of the March FOMC statement.

   Within EM, monetary policy is likely to be in focus for the next two days, as the
    central banks in India, Chile and Mexico announce policy decisions. Ahead of the
    RBI’s decision, India’s February inflation printed above consensus at 6.95% y/y.
    In Brazil, the minutes of the February COPOM meeting will be closely scrutinised.

   In the latest BIS quarterly review, the BIS reported that “the shedding of bank
    assets will play a small part” in reaching target capital ratios for European banks.
    It said banks plan to cover 77% of the capital shortfall by raising capital and
    reserves, converting hybrids and issuing convertible bonds, and increasing
    retained earnings. The report is somewhat narrowly focused on the EBA stress
    test, and we believe some countries (Spain, Portugal, and Ireland) will likely need
    a higher emphasis on deleveraging (Full Story).

Barclays Capital | Global Macro Daily

                                           Time to focus on FX volatility?
                                           Paul Robinson, Raghav Subbarao

                                           In yesterday’s Global Macro Daily, we discussed the prospects for the FX carry trade and
                                           valuation, arguing that the threat of countries’ authorities responding to seemingly
                                           overvalued currencies should be taken into account when deciding which high-yielding
                                           currencies were most attractive. In this piece, we take that analysis a step further by adding
                                           FX volatility to the mix. There are two reasons why volatility matters. First, the historical norm
                                           has been that the carry trade does well most of the time but, when it does badly, it does very
                                           badly. 2008/09 was a classic example of this where currency pairs such as AUD/JPY collapsed
                                           after a prolonged period of outperformance. At such times, volatilities tend to spike higher
                                           (Figure 1). Second, implied volatilities falling to unusually low levels and currency valuations
                                           becoming stretched are warning signs that confidence may be becoming excessive.

                                           Figure 2 shows the evolution of FX volatilities for the majors relative to the USD over the
                                           past few years. Realized and implied volatilities are close to their lows since the start of
                                           2008. That is despite the ongoing euro area problems, fears of commodity prices being too
                                           high with the threat of geopolitical problems pushing them higher, worries about the
                                           sustainability of the global recovery and, perhaps the elephant in the room, US Treasury
                                           yields being close to multi-decade lows.

                                           All of the issues listed above have been present for some time, though, while FX volatility
                                           has remained very subdued: implied volatility is low because realized volatility has been very
                                           constrained. And it does seem to be the case that option market participants are concerned
                                           that volatility could pick up. The spread between implied and realized volatility is unusually
                                           high for some currencies, in particular the JPY (in the top 1% of observations for its 3m
                                           volatility since the start of 2008), the BRL (close to its 92nd centile) and even the AUD
                                           (around its 80th centile). Despite this, though, the low levels of implied volatility for some
                                           currencies, given the uncertain environment, do suggest caution. As Figure 1 shows, when
                                           volatilities increase, it can happen very aggressively.

Figure 1: AUD/JPY volatilities exploded during the crisis                 Figure 2: Average G4 volatility has decreased to close to its
                                                                          post-crisis lows

 70                                                                        20
 50                                                                        14
 30                                                                          8
 10                                                                          2
   Jan08          Jan09        Jan10        Jan11         Jan12              0
                   3m Implied Vol       3m Realized Vol                      Jan08            Jan09     Jan10         Jan11        Jan12

Source: Barclays Capital                                                  Source: Barclays Capital

14 March 2012                                                                                                                               2
Barclays Capital | Global Macro Daily

                                               We do not advise that clients outright short the carry trade. The combination of extremely loose
                                               monetary policy and reasonable global growth is unlikely to change soon, in our view, and both
                                               should support risky trades, to some extent. But some FX volatilities do appear stretched, and
                                               we think that that, together with the valuation issues discussed in yesterday’s GMD, this means
                                               that some currencies are best avoided in terms of establishing longs. To identify which, Figures
                                               3 and 4 show the current levels of implied and realized volatility for currencies relative to their
                                               ranges since the beginning of 2008 along with their annualized yields.

                                               Two things strike us as particularly interesting. First, the G10 currencies shown in Figure 3
                                               appear to be more extreme in terms of implied volatilities. Implied volatilities for GBP, CAD
                                               and even the NZD and AUD are at very low levels. This is unlikely to last, in our view. Indeed,
                                               being long G10 FX volatility strikes us a relatively cheap way of hedging against general
                                               market problems reemerging.

                                               Second, there is no clear relationship between carry and implied volatilities. In particular, the
                                               TRY and ZAR among the EM currencies and the AUD and NZD among those in the G10
                                               have relatively high “ex ante Sharpe ratios” (ie, carry divided by implied volatility). This
                                               means that they represent attractive carry trades if you agree with option market pricing,
                                               and a cheap hedge if you are more concerned.

Figure 3: Current G10 implied volatility is low and largely                   Figure 4: EM implied vol appears less stretched than in the
uncorrelated with carry levels                                                G10 but again uncorrelated with carry

  30                                                                     5       90                                                             10
  25                                                                     4                                                                      8
  20                                                                     3       60                                                             6
  15                                                                     2                                                                      4
  10                                                                     1       30                                                             2
    5                                                                    0                                                                      0
    0                                                                    -1       0                                                             -2


















            Percentile of Implied Vol           Percentile of realized vol                Percentile of Implied Vol     Percentile of realized vol
            Fwd implied yields                                                            Fwd implied yields

Source: Barclays Capital                                                      Source: Barclays Capital

14 March 2012                                                                                                                                        3
Barclays Capital | Global Macro Daily


                                        Euro area: HICP inflation likely to stay above 2.0% for the rest of this year
                                        Fabio Fois

                                        Euro area HICP inflation was unrevised at 2.7% y/y in February in line with both our and the
                                        market's expectations. Core inflation was unchanged at 1.5% y/y in line with our
                                        expectations but a notch below the market's which was for an increase of 0.1pp to 1.6%
                                        y/y. Also as we expected, the HICPx print was 113.53 (no consensus was available). We
                                        think euro area inflation has peaked for this year and is now set to slowly decline during the
                                        rest of 2012. Full Story

                                        Euro area IP: Modest start to 2012; consistent with declining output, but
                                        with improving momentum in Q1 12 vs Q4 11
                                        Francois Cabau

                                        It is a first evidence from hard data that overall economic momentum should improve in Q1
                                        12 from Q4 11, which goes hand in hand with our baseline scenario that euro area GDP
                                        should contract by 0.2% q/q in Q1 12 less than -0.3% q/q estimated by eurostat for Q4 11.
                                        Full Story

                                        UK average earnings growth falls sharply, while unemployment continues to rise
                                        Blerina Uruci

                                        Labour market conditions continued to deteriorate in January, with unemployment rising
                                        and earnings growth slowing. The ILO unemployment rate was unchanged at 8.4%
                                        (consensus/BarCap: 8.4%). Nevertheless, the number of unemployed people increased by
                                        28k over the period to 2.67 million. The most striking feature of today's release is the
                                        unexpectedly sharp fall in headline earning growth. Headline average weekly earnings
                                        growth fell to 1.4% 3m/y (consensus/BarCap: 1.9%) from 1.9% previously. Full Story

                                        France: N. Sarkozy and F. Hollande shoulder to shoulder
                                        Fabrice Montagne, Marion Laboure

                                        France: N. Sarkozy and F. Hollande shoulder to shoulder. For the first time since the
                                        beginning of the presidential campaign, a poll published today shows N. Sarkozy in the lead
                                        in the first round with 28.5% of voting intentions while F. Hollande would secure 27% of the
                                        votes (Ifop-Paris Match). N. Sarkozy has shown some improvement in the polls since he
                                        officially announced his campaign but has never until today been put in front in the first
                                        round. Full Story

                                        European Fixed Income Strategy Morning Comment - 14 March 2012
                                        Mikael Nilsson

                                        Last night's FOMC statement acknowledged better incoming data and upgraded the
                                        committee's assessment of the economic outlook. After the statement, Fed rate hike
                                        expectations were pulled forward, with Dec '13 fed fund futures now trading at c 40bp. In
                                        addition, the 2y Treasury-OIS basis cheapened to 10bp. Our US strategists believe these
                                        moves are inconsistent with expectations of a 7.6% unemployment rate by the end of 2013

14 March 2012                                                                                                                        4
Barclays Capital | Global Macro Daily

                                        and with the market paring QE3 expectations. As such, they prefer expressing long views
                                        through 2y Treasuries. Full Story

                                        Sweden: Inflation profiles updated
                                        Marcus Widen, Mikael Nilsson

                                        In light of this morning's February inflation report, we have updated our CPI and CPIF
                                        profiles. Although there are not any major changes, some remarks are worth mentioning,
                                        and we still expect the Riksbank preferred measure, CPIF, to remain below 2% for the
                                        foreseeable future. Full Story

                                        Asia Pacific
                                        JPY: Further upside potential, we now expect USD/JPY at 90
                                        Masafumi Yamamoto, Guillermo Felices

                                        Given the strong upward momentum and our view that the factors behind the recent move
                                        will remain intact for a while and that downside risks have been dramatically reduced, we
                                        revise our USD/JPY forecasts upward. We now expect USD/JPY to reach 84 in 1m, 88 in 3m,
                                        and 90 yen in 6m and 1y (previous forecasts: 1m 78, 3m 80, 6m 82, 1y 84). To express our
                                        bullish view on USD/JPY we recommend buying a 3m USD/JPY one-touch option at 88,
                                        which costs 28.9% of notional with spot reference at 82.90 yen. Full Story

                                        Japan rates strategy: Correction started in cheap 30y swaps - recommend a
                                        weighted JGB futures vs 30y swap flattener
                                        Reiko Tokukatsu, CFA

                                        Given the 54-sen sell-off in JGB futures today, one might hesitate to sell futures from here.
                                        But we believe we are finally seeing a correction in JPY curves, where the belly is rich (most
                                        notably in JGB futures) and the long end is cheap. We recommend a weighted 7s30s
                                        flattener using JGB futures versus 30y swaps. Full Story

                                        Korea: Improving trend in labour market in Feb masked temporarily by
                                        'graduation season' distortion
                                        Wai Ho Leong, Rahul Bajoria

                                        The seasonally adjusted unemployment rate jumped unexpectedly to 3.7% in February
                                        (BarCap: 3.1%; consensus: 3.2%), from 3.2% in January. We believe this was due to the
                                        larger than expected influx of college graduates into the job market, a point we had not
                                        taken into account in our forecast. Stripping out the distortion created by graduation
                                        season, we are left with a strong labour market report for February, and a trend of
                                        continued improvement in labour market conditions. Full Story

                                        China: Strong property investment growth in January-February will not be
                                        Jian Chang, Yiping Huang, Lingxiu Yang

                                        Property investment growth in China, a key area to watch for downside growth risks,
                                        appears to have reversed its earlier rapid slowing trend, having risen to 27.8% y/y in
                                        January-February from 20.1% in November and 12.3% in December. This is despite the
                                        continued slide in property sales and weakness seen in the data for new loans and steel and
                                        cement production. We look in some detail at this property investment trend, keeping in
                                        mind the observed seasonality effect. Full Story

14 March 2012                                                                                                                        5
Barclays Capital | Global Macro Daily

                                        North America
                                        US Fixed Income Outlook for March 14: Treasuries sell off as the FOMC
                                        acknowledges data improvement
                                        Ajay Rajadhyaksha, Dean Maki
                                        The Treasury market sold off on Tuesday, and the curve steepened – 2y, 5y, 10y, and 30y
                                        yields rose 1.5bp, 4.5bp, 4.7bp, and 5.2bp. Economic data were stronger than expected.
                                        Retail sales ex-auto and gas increased 0.6% in February, higher than consensus
                                        expectations of 0.5%. Business inventories also printed higher than forecast, and our
                                        economics team's tracking estimate of Q1 GDP rose to 2.1%.

                                        In the March FOMC statement, the Fed acknowledged better data and changed the
                                        categorization of the FOMC's growth expectation from "modest" to "moderate," which also
                                        likely contributed to the sell-off. The market pared back its expectations of additional asset
                                        purchases, as evidenced by the cheapening of the 10y sector, strengthening of the USD, and
                                        sell-off in gold. Later in the day, JPM announced an equity buyback and boosted its
                                        dividend, which led to a rally in equity markets and exacerbated the Treasury sell-off. After
                                        the FOMC statement, Fed hike expectations were also pulled forward. Dec13 fed fund
                                        futures are now trading at ~40bp, which is too high relative to expectations of a 7.6%
                                        unemployment rate at the end of 2013. In addition, the 2y Treasury-OIS basis cheapened to
                                        10bp, which is inconsistent with the market’s paring back QE3. We therefore like expressing
                                        the long view through 2y Treasuries. Full Story

                                        Federal Reserve Commentary: March FOMC: Better data plus upgraded
                                        outlook equal a lower probability of QE3
                                        Michael Gapen, Troy Davig

                                        The better data flow, the improvement in the characterization of the outlook, the
                                        acknowledgement of a healthier labor market, and the reduction of strains in global
                                        financial markets all point toward a further reduction in the probability of additional
                                        quantitative easing, in our view. We believe that the economy would either need to suddenly
                                        slow or inflation to decline more than the Committee expects before additional asset
                                        purchases are initiated. We do not forecast further easing this year. Full Story

                                        US retail sales in February raise Q1 GDP tracking to 1.9%
                                        Troy Davig

                                        Retail sales increased 1.1% m/m in the month of January from an upwardly revised 0.6% in
                                        the month prior (initial January estimate: 0.4%). The upward revisions and stronger-than-
                                        expected increase in core has raised our Q1 GDP tracking estimate from 1.5% q/q (saar) to
                                        1.9%, with consumption growth in Q1 also now tracking at 1.9%. Full Story

                                        US small business optimism climbs higher in February
                                        Cooper Howes

                                        The National Federation of Independent Business (NFIB) index of US small business
                                        optimism rose to 94.3 in February, which was below the consensus estimate of 94.5 but
                                        above the January reading of 93.9. This was the sixth consecutive monthly increase and
                                        puts the index only slightly below its value in February 2011 (94.5) but significantly above
                                        its February 2010 print (88.0). Full Story

14 March 2012                                                                                                                        6
Barclays Capital | Global Macro Daily

                                        US business inventories in January lift Q1 GDP tracking to 2.1%
                                        Troy Davig

                                        Business inventories increased 0.7% m/m in January from an upwardly revised 0.6% in the
                                        month prior (initial December estimate: 0.4%). The strongest gains were in the
                                        manufacturing (0.9%) and retail (0.5%) sectors, while wholesale inventories fell 0.1%. Retail
                                        inventories excluding autos increased 0.4%, which boosted our Q1 GDP tracking estimate
                                        to 2.1% from 1.9%. Full Story

                                        US January JOLTs report shows more job openings
                                        Cooper Howes

                                        The January US Job Openings and Labor Turnover (JOLTs) report showed 3.5mn job
                                        openings, which was unchanged from December after an upward revision (previous:
                                        3.4mn). The number of unemployed in January was 12.8mn, meaning there were an
                                        estimated 3.7 unemployed job seekers for each opening. Full Story

                                        Russia: Pre-election fiscal weakening in February
                                        Vladimir Pantyushin

                                        Russia's Federal budget posted a deficit of RUB245.3bn in February, while the January figure
                                        was revised up from a RUB17.9bn deficit to a RUB27.2bn surplus. To some extent weaker
                                        performance in Jan/Feb was due to a reallocation of expenditure from later months in the
                                        run-up to the presidential elections. Overall, the report confirms our expectation that the
                                        budget is shifting into deficit, although not to the extent specified in the budget law (we
                                        expect a full-year figure of 1.0% of GDP versus 1.5% in the law). Full Story

                                        Russia: CBR leaves policy rates unchanged
                                        Vladimir Pantyushin, Koon Chow

                                        The Bank of Russia (CBR) kept all its monetary policy parameters unchanged today, in line
                                        with expectations. However, the bank again expressed a concern about the growth outlook.
                                        We believe this, along with the support of the banking sector liquidity, will bring another
                                        25bp rate cut in May. We view the CBR concerns about inflation outlook as slightly
                                        overdone: although we expect the disinflation trend to reverse in H2, we believe the
                                        headline CPI will remain within the 5.0-6.0% end-year limit. Full Story

                                        South Africa: Mining production still under pressure
                                        Jeffrey Schultz

                                        South Africa's mining sector got off to a relatively poor start in 2012 it seems with headline
                                        production growth slipping back into negative territory in January, falling 2.5% y/y (prior:
                                        +0.1%). On a seasonally adjusted m/m basis, production growth dipped 4.7% in the month
                                        and was driven largely by contractions in PGM (-15.3% m/m); gold (-3.5%); nickel (-
                                        11.7%) and other non-metallic mineral (-7.5%) production. Strong positive m/m
                                        contributions which helped offset some of these declines came largely from diamond
                                        production which jumped an impressive 33.9% in January, while manganese and building
                                        material production rose 9.8% and 7.3%, respectively. Full Story

14 March 2012                                                                                                                        7
Barclays Capital | Global Macro Daily


                                        Norway – Norges Bank policy rate: We expect the Norges Bank to keep the policy rate
                                        unchanged at 1.75%. Indeed, since the December meeting many things have happened.
                                        While global prospects seem somewhat better, the domestic data have proved solid and
                                        credit growth continues to be elevated. In this environment we retain our view of
                                        unchanged rates during 2012; however, the recent decisive appreciation of the NOK
                                        suggests there could be some probability of a cut.

                                        Euro area – Employment: We look for euro area employment to fall by 0.3% q/q in Q4 11,
                                        which would be the second consecutive negative quarter, after -0.1% q/q in Q3 11. As we
                                        only envisage a very gradual return to growth, we believe that one should expect to see
                                        more job losses in the forthcoming quarters.

                                        Asia Pacific
                                        Philippines - Remittances: We expect remittances to fall about 12% m/m given seasonal
                                        weakness at the start of the year.

                                        India - RBI policy rate: Our base case calls for a 25bp repo rate cut in April; we see an
                                        outside chance of a March cut. We expect the RBI to lower the cash reserve ratio (CRR)
                                        50bp to address persistent tightness in banking system liquidity. A cut in both the repo rate
                                        and the CRR at the same policy meeting is unlikely, in our view.

                                        North America
                                        US - Import prices: We are looking for a 0.4% increase in import prices in February,
                                        reflecting a gain in petroleum prices and a small rise in non-petroleum prices, of 0.1%. This
                                        would be consistent with small declines in the y/y rates of headline and ex-petroleum
                                        import prices, continuing the recent downward trend. This is likely to continue in the near
                                        term as base effects from last year’s energy price rise play out. However, the recent rebound
                                        in oil prices and decline in the trade-weighted dollar hint at some import price pressures in
                                        the pipeline.

                                        US - Current account: We expect the current account deficit to have widened modestly, to
                                        $113bn in Q4 from $110.3bn in Q3.

                                        Israel - Current account: C/A balance likely to be negative in Q4 11 due to deterioration in
                                        trade and seasonal weakness of income account.

                                        Turkey - Unemployment rate: Unemployment typically jumps in December, but on
                                        seasonally-adjusted basis it seems to have stabilised around levels just below 9.5%.

                                        Ukraine - Retail trade: Consumer sector remains a key growth driver. Strong wage growth
                                        will support further expansion in the near term.

14 March 2012                                                                                                                       8
Barclays Capital | Global Macro Daily

                                        Latin America
                                        Mexico - Aggregate supply & demand: Our forecast is consistent with imports growing
                                        5.5% y/y. Overall, we expect this demand breakdown report to show a sharp slowdown of
                                        investments – monthly data point to a negative print of -0.4% q/q saar, despite the ongoing
                                        dynamism by the end of the quarter. This is reflecting weak business confidence, likely
                                        postponing investment decisions.

                                        Brazil - COPOM meeting minutes: To our surprise, but sanctioning market expectations,
                                        the BCB increased the pace of easing and slashed the SELIC rate 75bp, to 9.75%, in a split
                                        decision, with five votes supporting the more aggressive cut and two siding with
                                        maintaining the 50bp pace. With very little to read from the statement, all focus will be on
                                        the minutes. But the more aggressive cut, in our view, leads to at least two possible
                                        interpretations: 1) the BCB decided to anticipate the cycle by cutting more aggressively. If
                                        this is the case, the minutes should bring a more hawkish tone, indicating that the BCB is
                                        ready to pause to gauge the effect of the stimulus already deployed (275bp of cuts); or 2) it
                                        decided to act more aggressively to help stem the appreciation of the currency and boost
                                        domestic activity, reflecting a strong surprise with the 2.7% real GDP growth last year and
                                        weak January 2012 IP release. While the minutes will be critical to understand the Copom
                                        view, we think the second scenario is more likely.

14 March 2012                                                                                                                       9
Barclays Capital | Global Macro Daily


Wednesday 14 March                                                                                          Period         Prev 2        Prev 1        Latest     Forecast    Consensus
 05:30 Portugal: FM Gaspar speaks on the third review of Portugal's financial aid program at Parliamentary Commission
 08:00 E17: ECB Executive board member Praet speaks at the “Collateral Solutions Conference” in Paris
 09:00 Hungary: Central bank minutes                                                                                                                                     -              -
 09:00 Norway: Interest rate announcement, %                                                                Mar              1.75          1.75          1.75         1.75           1.75
 09:45 UK: BoE Executive Director Haldane speaks at the LEI Symposium in New York
 10:00 US: Fed President Bernanke (FOMC voter) speaks in Nashville
 11:40 Sweden: Riksbank Governor Ingves speaks on the economic situation and new banking regulations in Stockholm
 13:00 Germany: Chancellor Merkel speaks on "German Economy" in Heidelberg
 15:00 Ireland: CB Governor Honohan speaks at University of Limerick Society in Dublin
   -   Brazil: CAGED formal job creations, k (to 21/03)                                                     Feb               42.7       -408.2          118.9            -              -
   -   Israel: Current account, $ bn                                                                        Q4                 0.3          -0.2            0.6           -              -
 02:30 India: WPI, % y/y                                                                                    Feb                9.5           7.5            6.6         6.6          6.9 A
 03:00 Finland: HICP, % m/m (y/y)                                                                           Feb          0.2 (3.2)     0.0 (2.6)     0.8 (3.0)    0.9 (3.1)    0.8 (3.0) A
 03:00 Sweden: Unemployment rate (PES), %                                                                   Feb                4.4           4.7            4.8         4.8          4.7 A
 04:00 Slovakia: HICP, % m/m ( y/y)                                                                         Feb          0.5 (4.8)     0.1 (4.6)     1.5 (4.1)    0.0 (3.7)    0.2 (4.0) A
 05:00 Austria: HICP, % m/m (y/y)                                                                           Feb          0.1 (3.9)     0.2 (3.4)    -0.5 (2.9)    0.5 (2.6)    0.5 (2.6) A
 05:30 UK: Average weekly earnings, % 3m/y                                                                  Jan                2.1           2.0          1.9 R         1.9          1.4 A
 05:30 UK: Core average earnings, % 3m/y                                                                    Jan                1.8           1.9            2.0         2.0          1.7 A
 05:30 UK: ILO unemployment rate, %                                                                         Jan                8.3           8.4            8.4         8.4          8.4 A
 05:30 UK: Claimant count unemployment, k                                                                   Feb                0.2           1.9          7.0 R         4.9          7.2 A
 06:00 Croatia: CPI, % y/y                                                                                  Feb                2.6           2.1            1.2           -          1.3 A
 06:00 E17: Industrial production, % m/m (y/y)                                                              Jan          0.1 (1.0)    -0.4 (0.2)   -1.1 (-1.8)       -0.2 R   0.2 (-1.2) A
 06:00 E17: Final HICP, % m/m (y/y)                                                                         Feb          0.3 (2.7)    -0.8 (2.6)     ...(2.7) P   0.5 (2.7)    0.5 (2.7) A
 06:00 E17: HICP ex tobacco, index (2005 = 100)                                                             Feb            113.58       113.91          112.96      113.53       113.53 A
 06:00 E17: 'Eurostat' core (HICP x fd, alc, tob, ene), % m/m (y/y)                                         Feb         -0.1 (1.6)     0.4 (1.6)    -1.7 (1.5)    0.4 (1.5)    0.3 (1.5) A
 07:00 South Africa: Retail sales constant, % y/y                                                           Jan                7.5           7.2            8.7         8.3          3.9 A
 08:30 US: Import prices, % m/m (y/y)                                                                       Feb         0.7 (10.1)    -0.1 (8.5)     0.3 (7.1)    0.4 (5.7)      0.6 (5.8)
 08:30 US: Nonpetroleum import prices, % m/m (y/y)                                                          Feb         -0.3 (3.3)     0.1 (2.5)     0.0 (1.7)    0.1 (1.9)              -
 08:30 US: Current account balance, $ bn                                                                    Q4             -119.6        -124.7         -110.3      -113.0          -115.0
 10:00 Mexico: Aggregate supply & demand, % y/y                                                             Q4                 6.0           4.2            4.9         4.2            4.7
 10:30 Brazil: Economic activity index, % y/y                                                               Feb                0.7           0.8            1.5           -              -
 17:30 New Zealand: Business PMI, index                                                                     Feb               46.5          51.6           50.5           -              -
 20:00 New Zealand: Consumer confidence, % m/m                                                              Mar               -0.6           7.1           -2.4           -              -
 20:00 Australia: Inflation gauge , % m/m                                                                   Mar                2.4           2.8            2.5           -              -
 20:30 Australia: Vehicle sales, % m/m (y/y)                                                                Feb         -0.7 (2.5)   -2.7 (-3.0)     1.3 (2.7)            -              -
 00:00 Malaysia: 15y Bonds Auction                                                                                                                                              MYR 3 bn
 00:00 Malaysia: 126d/208d/306d Notes Auction                                                                                                                                   MYR 4 bn
 06:00 Italy: BTP Auction                                                                                                                                                         € 6.5 bn
 10:45 UK: 7-15y Reverse Gilt Auctions                                                                                                                                            £ 1.5 bn
 14:00 US: 30y Bond Auction                                                                                                                                                       $ 13 bn
 23:00 Japan: 20y JGB Auction                                                                                                                                                  ¥ 1100 bn

14 March 2012                                                                                                                                                                          10
Barclays Capital | Global Macro Daily

Thursday 15 March                                                                                          Period           Prev 2           Prev 1       Latest     Forecast    Consensus
   -     Global: G20 Sherpas Meeting (to 16/03)
   -     Ireland: FM Noonan visit France
 02:30 India: RBI repo rate, %                                                                             Mar                8.50             8.50         8.50         8.50         8.50
 02:30 India: RBI reverse repo rate, %                                                                     Mar                7.50             7.50         7.50         7.50         7.50
 04:00 E17: Euromoney conference in Luxembourg
 04:30 Swi: Interest rate announcement, %                                                                  Mar         0.00-0.25         0.00-0.25     0.00-0.25    0.00-0.25    0.00-0.25
 04:30 Sweden: Riksbank Governor Ingves speaks on Finance's public hearing on financial stability from a consumer perspective in Stockholm
 05:00 E17: ECB publishes monthly bulletin                                                                 Mar
 05:00 Finland: CB Governor Liikanen speaks on monetary policy and global economy in Helsinki
 07:30 Brazil: COPOM meeting minutes                                                                       Feb
 07:30 UK: BoE MPC Member Broadbent speaks at the Market News Connect Seminar in London
 09:00 Neth: CB Governor Knot speaks at VU Amsterdam university in Amsterdam
 14:30 Austria: CB Governor Nowotny speaks in Vienna
 18:00 Chile: Overnight rate target, %                                                                     Mar                5.25             5.00         5.00         5.00         5.00
   -     Peru: Economic activity index, % y/y                                                              Jan                5.30              5.10         6.00         5.65            -
   -     Brazil: Tax collections, BRL bn (to 22/03)                                                        Feb                79.0             96.6        102.6             -            -
   -     Peru: Unemployment rate, %                                                                        Feb                 7.0               7.0          7.8            -            -
   -     Philippines: Remittances, % y/y                                                                   Jan                 6.2             10.6           6.2          7.2            -
   -     Ukraine: Retail trade YTD, % y/y (to 16/03)                                                       Feb                14.5              14.7         13.8         11.2            -
 03:00 EU 27: New car registrations, % y/y                                                                 Feb                -3.5              -6.4         -7.1            -            -
 04:00 Czech: Retail sales, % y/y                                                                          Jan                 1.5               0.5          1.6            -          0.7
 04:00 Turkey: Unemployment rate, %                                                                        Dec                 8.8               9.1          9.1            -            -
 04:30 Sweden: Unemployment rate, %                                                                        Feb                 6.7               7.1          8.0            -          8.0
 05:30 Italy: General govt. debt, € bn                                                                     Jan             1909.1           1904.8        1897.9             -            -
 06:00 E17: Eurozone employment, % q/q (y/y)                                                               Q4            0.1 (0.3)         0.2 (0.4)   -0.1 (0.3)   -0.3 (0.0)            -
 06:00 E17: Labor cost, % y/y                                                                              Q4                  2.5               3.3          2.7            -          2.3
 07:00 Ireland: HICP, % m/m (y/y)                                                                          Feb           0.0 (1.7)        -0.1 (1.4)   -0.4 (1.3)    0.7 (1.1)        (1.1)
 07:00 Brazil: IGP-10 inflation, % m/m                                                                     Mar                0.19             0.08          0.04            -         0.25
 08:30 US: PPI, % m/m (y/y)                                                                                Feb           0.2 (5.7)        -0.1 (4.8)    0.1 (4.1)    0.5 (3.3)    0.5 (3.3)
 08:30 US: Core PPI, % m/m (y/y)                                                                           Feb           0.1 (2.9)         0.3 (3.0)    0.4 (3.0)    0.2 (3.9)    0.2 (2.9)
 08:30 US: Initial jobless claims, k (4wma)                                                                10-Mar      353 (360)         354 (355)     362 (355)    365 (359)          357
 08:30 US: Empire State mfg, index                                                                         Mar                8.19            13.48        19.53          22.0         17.5
 09:00 US: Net long-term TIC flows, $ bn                                                                   Jan                 8.1              61.3         17.9            -         38.5
 10:00 Poland: Budget level YTD, PLN bn                                                                    Feb               -22.5            -21.6          -5.3            -            -
 10:00 US: Philadelphia Fed mfg, index                                                                     Mar                 6.8               7.3         10.2         11.5         12.0
 12:30 Israel: CPI, % y/y                                                                                  Feb                 2.6               2.2          2.0          1.9          1.7
 17:00 Colombia: Trade balance, USD mn                                                                     Jan             103.00             71.10     1210.00              -      975.00
 20:30 Singapore: Non-oil domestic exports, % y/y                                                          Feb                 1.4               9.0         -2.1           15         16.2
 00:00 Malaysia: 182d Notes Auction                                                                                                                                              MYR 1 bn
 05:30 Spain: 3y, 4y and 6y SPGB Auction                                                                                                                                          € 4.5 bn
 05:50 France: 2y & 4y BTAN Auction                                                                                                                                               € 8.5 bn
 06:30 UK: 2042 Gilt Auction                                                                                                                                                     £ 2.25 bn
 06:50 France: 7y OATi Auction                                                                                                                                                    € 0.6 bn
 06:50 France: 10y & 15y OATei Auction                                                                                                                                            € 1.6 bn

Note: All times are New York time.
Sources: Reuters, Market News, Bloomberg, Barclays Capital

14 March 2012                                                                                                                                                                           11
Barclays Capital | Global Macro Daily


Larry Kantor                        Piero Ghezzi
Head of Research                    Head of Economics,
+1 212 412 1458                     Emerging Markets and FX Research             +44 (0)20 313 42190

Michael Gavin                       Barry Knapp                         Dean Maki                           Michael Pond                      Ajay Rajadhyaksha
Head of Global Macro Strategy and   Head of US Equity Strategy          Head of US Economics Research       Co-head, Interest Rate Strategy   Head of Rates and Securitised
Head of EM Strategy                 +1 212 526 5313                     +1 212 526 1731                     +1 212 412 5051                   Products Strategy
+1 646 412 5915                                +1 212 412 7669                                                                                                            

Rajiv Setia                         Michael Zenker
Co-head, Interest Rate Strategy     Head of US Commodities Research
+1 212 412 5507                     +1 415 765 4743    

Julian Callow                       Koon Chow                           Guillermo Felices                   Laurent Fransolet                 Simon Hayes
Head of International Economics     Head of Emerging EMEA Strategy      Head of European FX Strategy        Head of European Fixed Income     Head of UK Economics
and Chief European Economist        +44 (0)20 777 37572                 +44 (0)20 355 52533                 Strategy                          +44 (0)20 7773 4637
+44 (0)20 7773 1369                     +44 (0)20 7773 8385                                                                               
Paul Horsnell                       Moyeen Islam                        Alan James                          Christian Keller                  Sreekala Kochugovindan
Head of Commodities Research        UK Rates Strategy                   Head of Inflation-linked Strategy   Head of Emerging EMEA Strategy    Asset Allocation Strategy
+44 (0)20 7773 1145                 +44 (0)20 7773 4675                 +44 (0)20 7773 2238                 +44 (0)20 7773 2031               +44 (0)20 7773 2234          
Alia Moubayed                       Kevin Norrish                       Antonio Garcia Pascual              Paul Robinson                     Edmund Shing
Senior Economist – Middle East      Commodities Research                Chief Southern European Economist   Head of FX Research               Head of European Equity Strategy
& North Africa                      +44 (0)20 7773 0369                 +44 (0)20 313 46225                 +44 (0)20 777 30903               +44 (0)20 7773 4307
+44 (0)20 313 41120         

Jon Scoffin                         Olivier Desbarres                   Yiping Huang                        Wai Ho Leong                      Chotaro Morita
Head of Research, Asia Pacific      Head of FX Strategy, Asia-Pacific   Chief Economist, Emerging Asia      Senior Regional Economist –       Head of Japan Fixed Income Strategy
+65 6308 3217                       ex-Japan                            +852 2903 3291                      Korea, Malaysia, Singapore,       +81 3 4530 1717              +65 6308 2073                          Taiwan                  
                                                                      +65 6308 3292
Kyohei Morita                       Hamish Pepper                       Gavin Stacey                        Fumiyuki Takahashi                Yoshio Takahashi
Chief Economist, Japan              FX Strategist, Asia-Pacific         Fixed Income Strategist,            Equity Strategist, Japan          Head of Non-Yen Strategy, Japan
+81 3 4530 1688                     ex-Japan                            Australia and New Zealand           +81 3-4530 2943                   +81 3 4530 1686            +65 6308 2220                       +61 2 9334 6128           
Nick Verdi                          Tetsufumi Yamakawa                  Masafumi Yamamoto
FX Strategist, Asia-Pacific         Head of Research, Japan             Chief FX Strategist, Japan
ex-Japan                            +81 3 4530 1130                     +81 3 4530 5038
+65 6308 3093             

14 March 2012                                                                                                                                                                   12
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