Morning Report

29.08.2013

Increased Risk Appetite

NOK & 3m NIBOR 8.30 1.90 8.10 1.80 7.90 1.70 7.70 7.50 1.60 01-Aug 15-Aug 29-Aug
EURNOK 3m (rha)

The decline in the markets' risk appetite turned to a slight rise yesterday and today. UN Secretary-General said time was needed to investigate allegations that the Syrian regime has used chemical weapons against the civilians. This view has strong support from Russia and China, which claims that it is premature to discuss a resolution while UN inspectors were in Syria investigating the allegations. On the other hand, the United States and Britain believe that the evidences are sufficient and that the UN must act quickly. U.S. stocks shrugged off fears and rose 0.3 per cent yesterday. The rise in oil prices helped lift energy shares which was an important contributor to the growth. Also long-term Treasury yield climbed a few basis points, supporting the view that the risk appetite rose slightly . The recovery in the U.S. spread to Asia , where the Nikkei 225 is up 0.8 per cent when typing. This despite the fact that Japanese retail sales fell more than expected. Also in Hong Kong, South Korea, Taiwan and Indonesia stock market indices rose. In Shanghai stock prices slowed down a bit towards the end of the trading day. The rise in oil prices has stopped and the gold price has pulled slightly down since yesterday morning. In currency markets, the Japanese yen and Swiss franc weakened slightly, the latter only than 0.1 per cent against the euro. The euro has weakened slightly against the U.S. dollar, British pound and Swedish and Norwegian krone since yesterday morning. The movements were however moderate. In the U.S. we have previously seen that new home sales have declined. The same was true for the July pending home sale figures. These fell 1.3 per cent from June to July, following a decline of 0.4 per cent the previous month. Prior to that, it had however been a significant growth (5.8 per cent), and July figures are not yet back at the underlying trend. Interest rate cut from the European Central Bank in May and the general improvement in the financial markets has not stopped the slowdown in money growth in the Euro zone. Yesterday's figures showed that money supply rose 2.2 per cent from July last year to July this year, while the corresponding growth in June was 2.4 per cent. It was still slightly better than expectations of 2.1 per cent. Corporate loans and credit card loans fell respectively 3.7 per cent and 2.7 per cent year over year, while mortgage lending rose 0.7 per cent y/y. Developments in corporate loans and housing loans was weaker in July than in June, while the decline in consumer loans was less than the previous month. GfKs consumer confidence index for Germany fell 0.1 points from August to 6.9 in September, compared with 7.1 expected. Expectations for the country's economy fell 2.5 points while expectations for personal finances fell 5.6 points. The desire-to-buy index was up 3.7 points. The latter two are well above average last 20 years. The desire-to-buy is now at its highest since December 2006. The confidence index correlates however poorly with growth in private consumption. In Italy, consumers are more depressed. The retail sales value fell 0.2 per cent from May to June and has thus declined 3 per cent over the past 12 months. It is normally quite high correlation between retail sales and consumer spending. The continuing decline in retail sales suggests continued decline in y/y - rates in private consumption. One bright spot however is that the pace of decline is shrinking. Both Swedish businesses and consumers increasingly look brighter on the situation. Business confidence rose 3 points to 99.9 in August. Not surprising that the ongoing recovery in the Euro zone also elevates the mood of the export oriented Swedish manufacturing sector. Consumer Confidence rose from upward revised 98.3 in July to 99.3 in August. Thus, the index is close to the long-term average and at its highest level since July 2011. The recovery was still a bit weaker than expected. The increase is due to an improvement in the assessment of the current situation, while future expectations deteriorated. The Swedish Institute of Economic Research (KI) released yesterday new forecasts for the development of the Swedish economy. The improvements in business and consumer confidence suggest an improvement of the economic situation at the end of the year according to the KI. It also looks brighter in the labor market and the unemployment rate has begun to decline. At the same time the economy is stimulated through tax cuts and low interest rates. Looking ahead, however, KI said that fiscal policy should be tightened to achieve the objectives of surpluses. KI expects the policy rate at hold until it is raised in the first quarter of 2015. kyrre.aamdal@dnb.no Yesterdays key economic events (GMT) 07:00 Sweden Consumer Confidence 07:00 Sweden Business Confidence 14:00 USA Pending home sales Todays key economic events (GMT) 06:45 France INSEE Bus. Sent. 07:55 Germany Unemployment 12:30 USA GDP (revised) As of Aug Aug Jul As of Aug Aug Q2 Unit Index Index m/m % Unit Index 1000 q/q % Prior 98.3 94.9 -0.4 Prior 95.0 -7 1.7 Poll 95.4 0.0 Poll 96.0 -5 2.2 Actual 99.3 100.1 -1.3 DNB 98

Norw ay: 10y Gov't Bond

3.5

3.0
2.5

2.0
01-Aug
Rate

15-Aug

115 105 95 85 75 65 29-Aug

Diff (bp, rha)

Headquarter Dronning Eufemias gate 30 0191 Oslo Offices Abroad New York London Singapore Stockholm Sales Oslo (+47) Equity Fixed Income Regional Sales (+47) Bergen Bod Fredrikstad Hamar Lillehammer Kristiansand Oslo Stavanger Troms Trondheim Tnsberg lesund Private Clients Research Regional Sales (+47) Eirik Larsen Research FX/IR (+47) ystein Drum Kjersti Haugland Ole Andr Kjennerud Knut A. Magnussen Camilla Viland Magne stnor Kyrre Aamdal Credit Research (+47) Ole Einar Stokstad Martin Brter Mikael L. Gjerding Rolv Kristian Heitmann Thomas Larsen Knut Olav Rnningen Kristina Solbakken Magnus Vie Sundal

+47 03000

+ 1 212 681 2550 +44 207 283 0050 +65 6220 6144 +46 84 73 48 50

22 94 89 40 24 16 90 30

56 13 27 20 75 52 99 10 69 39 41 50 62 54 14 82 61 24 79 56 38 14 61 64 24 16 90 80 51 84 04 30 77 64 76 30 73 87 49 73 33 01 73 80 70 11 69 85 24 16 90 90

24 16 90 77

24 16 90 08 24 16 90 03 24 16 90 07 24 16 90 04 24 16 90 01 24 16 90 06 24 16 90 02

24 16 90 48 24 16 90 46 24 16 90 47 24 16 90 49 24 16 90 44 24 16 90 45 24 16 90 51 24 16 91 23

Morning Report
29.08.2013

3m LIBOR
0.154 0.153 0.152 0.151 0.150 0.149 01-Aug
EUR

0.27

0.27
0.26

15-Aug

0.26 29-Aug
USD (rha)

Oil price & NOK TWI 100 110 98 105 96 100 94 92 95 01-Aug 15-Aug 29-Aug
NOK TWI USD/b (rha)

FX 0700 USD/JPY EUR/USD EUR/GBP EUR/DKK EUR/SEK EUR/CHF EUR/NOK USD/NOK JPY/NOK SEK/NOK DKK/NOK GBP/NOK CHF/NOK

Last 97.36 1.3377 0.8617 7.4599 8.6986 1.2289 8.0707 6.0333 6.20 92.85 108.23 9.368 6.572

Today 97.76 1.3325 0.8582 7.4595 8.6722 1.2305 8.0608 6.0492 6.19 93.02 108.09 9.397 6.552

Spot rates and forecasts In 1m Nov-13 Feb-14 Aug-14 FX 0700 0.4 98 100 102 105 AUD -0.4 1.30 1.28 1.26 1.26 CAD -0.4 0.85 0.84 0.83 0.83 CHF 0.0 7.45 7.45 7.45 7.45 CZK -0.3 8.70 8.70 8.80 8.90 RUB 0.1 1.24 1.25 1.27 1.30 GBP -0.1 7.75 7.75 7.80 7.90 HKD 0.3 5.96 6.05 6.19 6.27 KWD -0.1 6.08 6.05 6.07 5.97 LTL 0.2 89.1 89.1 88.6 88.8 LVL -0.1 104.0 104.0 104.7 106.0 NZD 0.3 9.12 9.23 9.40 9.52 SEK -0.3 6.25 6.20 6.14 6.08 SGD

USD 0.898 1.048 0.924 19.296 33.180 1.553 7.755 0.285 2.591 0.528 0.784 6.509 1.276

NOK 5.431 5.770 6.552 31.351 18.232 9.397 0.780 21.256 2.335 11.464 4.743 93.020 4.742

US dollar 6.2 6.1 6.0 5.9 5.8 5.7 01-Aug 1.35 1.33 1.31 1.29 1.27 1.25 29-Aug
EURUSD(rha)

NOK 1m 3m 6m 12m 3y 5y 7y 10y

Prior 1.63 1.73 1.81 2.00 2.30 2.73 3.09 3.41

Last 1.62 1.72 1.81 2.00 2.32 2.76 3.11 3.43

Interest rates SEK Prior Last USD 1m 1.11 1.11 1m 3m 1.22 1.22 3m 6m 1.32 1.32 6m 12m Invalid Invalid RIC(s): RIC. STISEK1YDFI= 12m 3y 1.97 1.97 3y 5y 2.40 2.40 5y 7y 2.68 2.68 7y 10y 2.91 2.91 10y

Prior 0.18 0.26 0.39 0.67 0.88 1.68 2.31 2.88

Last 0.18 0.26 0.39 0.67 0.93 1.75 2.38 2.95

EUR 1m 3m 6m 12m 3y 5y 7y 10y

Prior 0.08 0.15 0.27 0.48 0.84 1.33 1.72 2.14

Last 0.08 0.15 0.27 0.48 0.86 1.37 1.76 2.18 Last 96.69 1.88 -0.89 10y sw ap 2.00 2.00 2.00

15-Aug

USDNOK

Japanese yen 100.0 7.0 99.0 6.5 98.0 97.0 6.0 96.0 5.5 95.0 94.0 5.0 01-Aug 15-Aug 29-Aug
USDJ PY JPYNOK(rha)

Norw ay Prior NST475 92.25 10y yld 2.93 - US spread 0.21 3m nibor 1.80 1.80 1.80

Norw ay Nov-13 Feb-14 Aug-14

Governm ent bonds Last SEK Prior Last US Prior 92.10 10y 91.14 91.14 10y 98.09 2.94 10y yld 2.50 2.50 10y yld 2.72 0.17 - US spread -0.22 -0.28 30y yld 3.69 Interest rate forecasts 10y 10y Sw eden 3m libor USA 3m libor sw ap sw ap 3.25 3.25 3.50 Nov-13 Feb-14 Aug-14 1.25 1.25 1.25 2.75 2.75 2.75 Nov-13 Feb-14 Aug-14 0.30 0.35 0.35

Last Germany Prior 97.64 10y 96.92 2.77 10y yld 1.85 3.74 - US spread -0.87 10y sw ap 2.75 2.75 3.00 3m euribor 0.20 0.25 0.25

Germany Nov-13 Feb-14 Aug-14

SEKNOK & CHFNOK

95 93 91 89 87 6.8 6.6 6.4 6.2 6.0 29-Aug
CHFNOK (rha)

01-Aug

15-Aug

SEKNOK

Equities
16200 15700 15200 14700 14200 13700 01Aug
Dow Jones

505 500 495 490 485 15Aug 29Aug

Os lo (rha)

NOK sov. NST21 NST22 NST23 NST471 NST472 NST475 NST475 NST475 NOK FRA SEP DEC MAR JUN

Miscellaneous Prior Last Change Maturity year rem. NOK-index TWI Prior 1.56 1.51 -5 18.12.2013 0.30 Last 97.83 97.69 1.62 1.60 -2 19.03.2014 0.55 Oil price: (Ldn,cl) 1m 1.62 1.62 0 18.06.2014 0.80 SPOT 116.91 115.84 1.68 1.68 1 15.05.2015 1.71 Gold price 28.08.2013 PM 2.06 2.07 1 19.05.2017 3.72 AM: 1419.3 1419.5 2.91 2.92 1 24.05.2023 9.74 Equities Today 0700 % last 2.91 2.92 1 24.05.2023 9.74 Dow Jones 14824.51 0.3% 2.93 2.94 2 24.05.2023 9.74 Nasdaq C. 3593.35 0.4% 3 mnd 6 mnd NOK NIDR NIBOR FTSE100 6430.06 -0.2% 1.75 1.85 1m 1.73 1.62 Eurostoxx50 2742.61 -0.2% 1.76 1.89 3m 1.82 1.72 DAX 8157.90 -1.0% 1.83 1.99 6m 1.88 1.81 Nikkei 225 13455.23 0.9% 1.93 2.10 12m 2.05 2.00 OSEBX 500.44 0.7% Sources to all tables and graphics: Thomson Reuters, Thomson Datastream and DNB Markets

Morning Report
29.08.2013
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