Morning Report

12.06.2013

BoJ gave marked reactions

Norw ay: 10y Gov't Bond 2.5 85 2.4 80 2.3 75 2.2 70 2.1 2.0 65 10-May 28-May 12-Jun
Rate Diff (bp, rha)

Japanese yen has appreciated by 1.8 per cent against the dollar from yesterday morning. The appreciation is related to monetary policy meeting in Japan where the central bank kept monetary policy unchanged. In advance there were expectations of an increase in purchases of long-term bonds to reduce market volatility, as discussed in yesterday's Morning Report. No new measures has contributed to a stronger Japanese yen and Japanese shares declined. This morning the Nikkei 225 is down 0.2 per cent after a late recovery. Yesterdays decision is cited as a major reason for yesterdays decline in U.S. stocks. DJIA was down 0.8 per cent and the S&P500 fell 1 per cent. In Europe several of the important indexes fell about 1 per cent. Long U.S. government bonds had a volatile session yesterday, with a marked increase in 10-year yields before the U.S. market opened. In the U.S. session, the yield markedly dropped and ended at 2.18 per cent, marginally up from the day before. In the currency market, the euro also strengthened against the dollar since yesterday morning, with a rise in the EURUSD at 0.8 per cent. The Norwegian krone has depreciated accordingly against the euro and the USDNOK is thus roughly unchanged from yesterday morning. SEK has weakened 0.6 per cent against the euro and thus strengthened slightly against the Norwegian kroner. Recently, the NOK positive news for the Norwegian economy have only led to limited stronger NOK. It seems as if several investors are reducing their positions in NOK and buy EURNOK on dips. The Confederation of Norwegian Enterprise (NHO) presented yesterday its Economic overview and business sentiment survey. The latter states that NHO-corporates outlook for 2013 is considerably more pessimistic than a year ago. Manufacturing firms now expect a decline in employment this year and next year. All major industries have become more negative, especially in manufacturing and business services. Few firms plan to increase investments. "In most industries, there is now a significantly greater proportion responding "reduced selling prices" and "descending orders and turnover" as the biggest obstacle to increased investment. It is clear now that fewer see "labor shortage" as the main obstacle", NHO writes. The survey shows that the demand for labor among NHO member firms is significantly lower than before. The companies plan to increase their workforce in 2013 by 0.8 percent. This is the half of first quarter estimate. A corresponding downward adjustment is made for planned staffing in 2014. Friday Norges Bank releases its Regional Network. NHOs barometer indicates lower growth prospects in the Regional Network. In the U.S. NFIB climbed further in May. This is an ISM index for small businesses. The level of NFIB is now the highest since April last year. It was expected that the index would remain unchanged. The index has risen nearly 5 per cent in two months. The index is still low, especially compared to the ISM, but has exaggerated recession after the crisis. There are still few companies that report plans for higher employment in the future. In the UK manufacturing output fell 0.2 per cent in April after rising 1.1 per cent in March, calculated as monthly growth rates. It was expected that production would fall by 0.3 per cent. The underlying growth rate is healthy 1.8 per cent annual rate. Industrial production amount to 15 per cent of GDP, but explains 70 per cent of the variation in the annual growth rate in GDP. Total industrial production rose 0.1 per cent, compared with the expected unchanged. There has been strong growth the previous two months. All in all, there have been some improvements in the last three months, although production levels remain low and close to the lowest level since the spring of 1992. In the UK there are an increasing number of figures that suggest improvements in the housing market. According to the appraisers organization (RICS / Royal Institute of Chartered Surveyors), home price inflation in May was 5 per cent, up from 1 per cent in April. This is the highest since mid-2010. In Sweden, consumer prices rose 0.2 per cent m/m in May, versus expected 0.1 per cent (Bloomberg). Annual rate was -0.2 per cent, slightly better than expected -0.3 per cent. The Riksbank estimated in April CPI-inflation to -0.1 per cent. Core inflation, as measured by CPIF (CPI with fixed interest rate payments) rose 0.2 per cent m/m and the annual growth was 0.7 per cent in May, as expected. The Riksbank forecasted 0.8 per cent in April. Inflation is slightly below the Riksbank's forecasts. GDP growth was better than the central bank expected, but several indicators suggest that the development of the Swedish economy is slightly weaker than the GDP figures show. Next monetary policy meeting is 3 July (decision). [email protected] Yesterdays key economic events (GMT) Japan BoJ MPC meeting 08:30 Sweden CPIF 09:30 UK Manufacturing production Todays key economic events (GMT) 09:30 UK LFS unemployment 09:30 UK Registered unemployment 10:00 EMU Industrial production As of May Apr As of apr may apr Unit y/y % m/m% Unit % 1000 m/m % Prior 0.5 1.0 Prior 7.8 -7.3 1.0 Poll 0.7 -0.3 Poll 7.8 -7.0 -0.3 Actual 0.7 -0.2 DNB

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
12.06.2013

3m LIBOR
0.130 0.125 0.120 0.115 0.110 0.105 10-May
EUR

28-May

0.28 0.28 0.27 0.27 0.27 12-Jun

Oil price & NOK TWI 94 110 93 105 92 100 91 90 95 10-May 28-May 12-Jun
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 98.24 1.3198 0.8501 7.4559 8.6776 1.2368 7.6270 5.7780 5.89 87.95 102.30 8.973 6.167

Today 96.45 1.3309 0.8498 7.4573 8.7276 1.2316 7.6928 5.7832 6.00 88.21 103.20 9.055 6.247

Spot rates and forecasts In 1m Aug-13 Nov-13 May-14 FX 0700 -1.8 102 105 107 110 AUD 0.8 1.27 1.26 1.30 1.32 CAD 0.0 0.85 0.85 0.86 0.87 CHF 0.0 7.45 7.45 7.45 7.45 CZK 0.6 8.55 8.45 8.50 8.60 RUB -0.4 1.24 1.25 1.27 1.30 GBP 0.9 7.55 7.50 7.45 7.40 HKD 0.1 5.94 5.95 5.73 5.61 KWD 1.9 5.83 5.67 5.36 5.10 LTL 0.3 88.3 88.8 87.6 86.0 LVL 0.9 101.3 100.7 100.0 99.3 NZD 0.9 8.88 8.82 8.66 8.51 SEK 1.3 608.87 600.00 586.61 569.23 SGD

USD NOK 0.945 5.461 1.020 5.667 0.925 624.588 19.254 30.018 32.393 17.842 1.566 9.052 7.764 0.744 0.285 20.285 2.594 2.228 0.528 10.957 0.789 4.562 6.556 88.154 1.255 4.604

US dollar 6.0 5.9 5.9 5.8 5.8 5.7 5.7 10-May 1.35 1.33 1.31 1.29 1.27 1.25 12-Jun
EURUSD(rha)

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

Prior 1.68 1.76 1.86 2.00 2.13 2.47 2.77 3.12

Last 1.67 1.76 1.88 2.02 2.21 2.57 2.87 3.20

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

Prior 1.17 1.22 1.26 1.56 1.89 2.17 2.43

Interest rates Last USD 1.17 1m 1.22 3m 1.26 6m #N/A 12m 1.57 3y 1.91 5y 2.18 7y 2.44 10y

Prior 0.19 0.28 0.41 0.69 0.69 1.26 1.77 2.32

Last 0.19 0.27 0.41 0.68 0.70 1.32 1.81 2.40

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

Prior 0.06 0.12 0.21 0.42 0.69 1.05 1.40 1.81

Last 0.06 0.13 0.23 0.43 0.75 1.15 1.48 1.88 Last 99.09 1.60 -0.59 10y sw ap 1.75 1.75 2.00

28-May

USDNOK

Japanese yen 104.0 7.0 102.0 6.5 100.0 98.0 6.0 96.0 5.5 94.0 92.0 5.0 10-May 28-May 12-Jun
USDJ PY JPYNOK(rha)

Norw ay Prior NST475 97.85 10y yld 2.24 - US spread 0.07 3m nibor 1.80 1.80 1.80

Norw ay Aug-13 Nov-13 May-14

Governm ent bonds Last SEK Prior Last US Prior 96.65 10y 95.54 95.66 10y 96.25 2.38 10y yld 1.98 1.97 10y yld 2.17 0.19 - US spread -0.19 -0.23 30y yld 3.33 Interest rate forecasts 10y 10y Sw eden 3m libor USA 3m libor sw ap sw ap 3.25 3.25 3.50 Aug-13 Nov-13 May-14 1.20 1.20 1.45 2.25 2.25 2.50 Aug-13 Nov-13 May-14 0.35 0.35 0.35

Last Germany Prior 96.03 10y 99.59 2.19 10y yld 1.55 3.32 - US spread -0.63 10y sw ap 2.00 2.00 2.50 3m euribor 0.25 0.25 0.25

Germany Aug-13 Nov-13 May-14

SEKNOK & CHFNOK

89
88

87 10-May

28-May

6.3 6.2 6.1 6.0 5.9 5.8 12-Jun

SEKNOK

Equities
15700 15200 14700 14200 13700 10May
Dow Jones

28May

500 490 480 470 460 450 12-Jun

NOK sov. NST20 NST21 NST22 NST471 NST472 NST475 NST475 NST475 NOK FRA JUN SEP DEC MAR

Miscellaneous Prior Last Change Maturity year rem. NOK-index TWI Prior 1.41 1.44 3 18.09.2013 0.27 Last 93.45 92.81 1.49 1.43 -6 18.12.2013 0.52 Oil price: (Ldn,cl) 1m 1.45 1.47 2 19.03.2014 0.77 SPOT 101.40 102.36 1.37 1.46 9 15.05.2015 1.92 Gold price 11.06.2013 PM 1.65 1.82 17 19.05.2017 3.94 AM: 1383.3 1374.3 0.00 0.00 0 24.05.2023 9.95 Equities Today 0700 % last 2.22 2.36 14 24.05.2023 9.95 Dow Jones 15122.02 -0.8% 2.24 2.38 14 24.05.2023 9.95 Nasdaq C. 3436.95 -1.1% 3 mnd 6 mnd NOK NIDR NIBOR FTSE100 6340.08 -0.9% 1.80 1.90 1m 1.78 1.67 Eurostoxx50 2683.20 -1.3% 1.81 1.93 3m 1.87 1.76 DAX 8222.46 -1.0% 1.83 1.97 6m 1.93 1.88 Nikkei 225 13289.32 -0.2% 1.89 2.03 12m 2.08 2.02 OSEBX 470.01 -1.7% Sources to all tables and graphics: Thomson Reuters, Thomson Datastream and DNB Markets

Morning Report
12.06.2013
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