Morning Report
07.12.2011
A bazooka on the way?
NOK & 3m NIBOR Not surprisingly, S&P's warning about a possible downgrading of the euro zone countries
8.00 3.50 affected markets negatively. It may seem as the EU summit will go for a solution where the
emergency fund EFSF will continue to be operational even after the permanent fund ESM is in
7.80 3.30
place by next summer.
7.60 3.10
7.40 2.90 As expected, the S&P report on Monday evening dampened European markets yesterday. Furthermore
27-Oct 16-Nov 6-Dec S&P also issued a negative watch for the EFSF yesterday. Stock markets in the euro zone fell slightly,
3m ra. EURNOK
while the British FTSE100 was unchanged from Monday. US markets were also weak, while there has
been a decent recovery in Asia last night. Still, it was encouraging that ten-year government bond
yields in Italy and Spain remained relatively stable around 6% and 5% respectively after the
sharp decline on Monday. The markets therefore still continue to have relatively high expectations for
SEK & 3m STIBOR the summit at the end of this week.
9.5 2.80
2.70
9.3 It is still uncertain what will be the result of the summit. What seems clear is that much stricter budget
2.60
9.1 rules for members of the euro zone will be implemented. According to the Financial Times the EU
2.50
considers to allow the emergency fund EFSF (which has a size of 440 billion euro) to continue to
8.9 2.40
be operational even after the permanent fund ESM is in place. The ESM, which will have a budget of
27-Oct 16-Nov 6-Dec
500 billion euro, may also be operational as early as in July 2012. The original plan was that ESM would
3m ra. EURSEK take over for EFSF in 2013. By letting the two funds operate simultaneously, the lending capacity
obviously increases significantly, although the capacity of the ESM will not be 500 billion from the start.
Headquarters +47 03000
In return, EU wants to increase the effect of EFSF to 600 billion euro by gearing up the fund. Some have
0021 Oslo
Stranden 21
also proposed to provide ESM funding from the ECB, but Germany has set itself against this when it
comes to EFSF. The plan probably contains a greater role for the IMF. Overall, this will probably be
Offices Abroad sufficient for the ECB to increase its intervention in the bond markets.
New York +1 212 681 3800
London +44 207 6211111
Shanghai
Singapore
+86 21 6132 2888
+65 6220 6144
It remains to be seen whether the selected strategy will be successful. It is not difficult to point at
Stockholm +46 8 4734850 possible challenges of the proposal. Increased supply of capital to the ESM, will for example weaken
the creditworthiness of countries involved. This may be one reason that the S&P warned of possible
Sales Oslo (+47)
Equity 22 94 89 40 downgrades. The gearing effect of EFSF is also uncertain, but it seems more realistic at 600 billion, than
Fixed Income 22 01 78 20
FX/IR 22 01 76 50 the 1000 billion that was proposed earlier this autumn. Another complaint is how the new budget rules
should to be controlled and how violations will be punished.
Regional sales (+47)
Bergen 55 21 95 80
Bodø 75 55 87 60 Midst of all the crisis talk encouraging figures for German industrial orders emerged yesterday.
Fredrikstad 69 39 41 50
Hamar 61 05 14 69 After a fall of 4.6% in September, orders increased with 5.2% in October. This was far better than
Haugesund 52 72 09 06
Lillehammer 61 27 32 27 expected. In particular, export markets lifted growth by 8.3%, but there was also an increase of orders in
Kristiansand
Oslo
38 07 28 62
22 01 76 50
the domestic market. The figures indicate that the German economy is still performing fairly well. Strong
Stavanger
Tromsø
51 84 04 30
77 62 96 80
competitiveness and a shift in exports towards Asian markets have probably made German industry less
Trondheim 73 58 74 89 dependent on the rest of the euro zone, where activity is slowing. Revised GDP figures for the euro
Tønsberg 33 01 73 80
Ålesund 70 11 69 85 zone growth showed a moderate increase of 0.2% in the third quarter. The details show that there
was moderate recovery in private consumption after a drop in the second quarter. Foreign trade also
Research Regional Sales (+47)
Eirik Larsen 22 01 76 55
contributed positively by strong growth in exports, while there was weak growth in private investment.
The third quarter is now history and there are indications that the fourth quarter will be weaker, perhaps
Research FX/IR (+47) with a fall in GDP. In this case, the euro zone is heading for a new recession.
Øystein Dørum 22 01 76 56
Kjersti Haugland 22 01 78 03
Ole André Kjennerud 22 01 78 24
Knut A. Magnussen 22 01 76 63 It becomes more evident that the effects of the euro crisis is about to spread. Yesterday came news that
Maren Romstad
Camilla Viland
22 01 76 64
22 01 77 41
the GDP in Brazil was unchanged from the second to the third quarter. Annual growth fell to 2.1%,
Kyrre Aamdal 22 01 76 67 which was lower than expected. The weakening of the economy becomes apparent when we compare
with last year, when GDP rose by 7.5%. High inflation also hinders the authority to implement stimulus
Credit Research (+47)
Ole Einar Stokstad 22 01 78 37 measures. This probably means that the activity in other Latin American countries will also slow in the
Mikael L. Gjerding 22 01 77 62
Åse Haagensen 22 01 76 93 future.
Rolv Kristian Heitmann
Thomas Larsen
22 01 76 77
22 01 77 36
[email protected]Knut Olav Rønningen 22 01 78 15
Yesterday's key economic events (GMT) As of Unit Prior Poll Actual
10:00 EMU GDP, revised Q3 Q/q % 0.2 0.2 0.2
11:00 Germany Manufacturing orders Oct M/m % -4.3 1.0 5.2
14:00 Canada Monetary policy meeting n/a % 1.0 1.0 1.0
Today’s key economic events (GMT) As of Unit Prior Poll DNB
09:00 Norway Manufacturing production Oct M/m% 0.8 0.1
09:30 UK Manufacturing production Oct M/m % 0.2 -0.3
11:00 Germany Industrial prod., prelim. Oct M/m % -2.7 0.4
Morning Report
07.12.2011
SPOT RATES AND FORECASTS
FX Prior Last % In 1 m ...3 m ...6 m ...12 m FX USD %
Oil spot & NOK TWI
USDJPY 77.76 77.71 -0.1% 80 80 80 90 AUD 1.0293 0.50%
118 100
EURUSD 1.340 1.345 0.3% 1.35 1.35 1.30 1.25 CAD 1.0078 -0.23%
112 98
EURGBP 0.860 0.860 0.1% 0.86 0.86 0.84 0.82 CHF 0.9245 -0.23%
106 96
EURCHF 1.242 1.243 0.1% 1.23 1.23 1.23 1.25 CZK 18.74 -0.61%
100 94
EURNOK 7.717 7.698 -0.2% 7.80 7.80 7.70 7.70 DKK 5.5299 -0.33%
27-Oc t 16-Nov 6-Dec
EURSEK 9.029 9.006 -0.3% 9.20 9.10 9.00 9.00 GBP 1.5636 0.24%
NOK TWI ra. $/b EURDKK 7.434 7.435 0.0% 7.45 7.45 7.45 7.45 HKD 7.7738 0.02%
USDNOK 5.761 5.725 -0.6% 5.78 5.78 5.92 6.16 ISK 118.73 -0.27%
JPYNOK 7.411 7.371 -0.5% 7.22 7.22 7.40 6.84 KWD 0.2767 -0.22%
EUR vs GBP & CHF SEKNOK 0.856 0.855 0.0% 0.85 0.86 0.86 0.86 LTL 2.5682 -0.35%
1.25 0.89 GBPNOK 8.979 8.953 -0.3% 9.1 9.1 9.2 9.4 LVL 0.5194 -0.33%
1.20 0.87 USDSEK 6.743 6.699 -0.7% 6.81 6.74 6.92 7.20 NZD 0.7823 0.29%
1.15 0.85 JPYSEK 8.674 8.630 -0.5% 5.45 5.39 5.54 6.48 PLN 3.3201 -0.68%
1.10 0.83 NOKSEK 1.172 1.171 0.0% 1.18 1.17 1.17 1.17 SGD 1.2815 -0.23%
27-Oct 16-Nov 6-Dec GBPSEK 10.511 10.475 -0.3% 10.70 10.58 10.71 10.98 RUB 31.1042 -0.77%
GBP r.a CHF
SWAP AN D MON EYM ARKET RATES
N IBOR STIBOR EURIBOR USD LIBOR
EURSEK & OMXS Prior Last Prior Last Prior Last Prior Last
9.4 500 1m 2.95 2.96 2.40 2.41 1.13 1.13 0.27 0.28
9.2 450 3m 3.13 3.14 2.68 2.69 1.40 1.40 0.53 0.54
9.0 400 6m 3.24 3.26 2.71 2.72 1.65 1.65 0.75 0.76
8.8 350 12m 3.35 3.33 2.77 2.78 1.83 1.83 0.91 0.92
27-Oct 16-Nov 6-Dec 3y 2.96 2.96 1.91 1.91 1.62 1.59 0.81 0.84
OMXS ra. 5y 3.29 3.29 2.08 2.08 2.06 2.03 1.31 1.34
EURSEK 7y 3.55 3.55 2.29 2.30 2.40 2.45 1.77 1.81
10y 3.76 3.76 2.41 2.42 2.72 2.75 2.22 2.24
Gov. Bonds, 10y
2.25 3.00 GOVERNM ENT BON DS
2.00 2.50 N ORWAY SWEDEN GERMANY US
1.75 2.00 Prior Last Prior Last Prior Last Prior Last
1.50 1.50 10y 115.2 110.55 116.239 116.25 98.28 98.05 99.234375 99.06
27-Oct 16-Nov 6-Dec 10y yield 2.46 2.48 1.79 1.79 2.21 2.22 2.09 2.12
NOK, ra. SEK vs bund 0.25 0.26 -0.42 -0.43 -0.12 -0.10
INTEREST RATE FORECASTS
JPY and DowJones N ORWAY SWEDEN GERMANY US
13 79 3m nibor 10y swap 3m stibor 10y swap 3m euribor 10y swap 3m libor 10y swap
12 78
In 3m 3.00 4.25 2.20 3.00 1.30 3.00 0.55 2.75
77
11 76 … 6m 2.80 4.50 2.10 3.25 1.10 3.25 0.55 3.00
10 75 … 12m 3.10 4.50 2.00 3.25 1.05 3.25 0.50 3.25
27-Oct 16-Nov 6-Dec
USDJPY ra. MISCELLANEOUS
DowJones, 1000 FRA NOK 3m Prior chg TWI Today % Stock ex. Today %
DEC 3.08 3.07 0.01 NOK 96.26 - 0.27 Dow Jones 12,150.1 0.4%
MAR 2.66 2.66 0.00 SEK 118.93 - 0.38 Nasdaq 2,649.6 -0.2%
USD and gold JUN 2.38 2.39 -0.01 EUR 105.73 0.15 FTSE100 5,568.7 0.0%
1900 1.46
SEP 2.35 2.36 -0.01 USD 78.32 - 0.24 Eurostoxx50 2,356.7 -0.5%
1800 1.42
1700 1.38 FRA SEK 3m Prior chg GBP 80.00 - Dax 6,028.8 -1.3%
1600 1.34 DEC 2.75 2.76 -0.01 Comm. Today Last Nikkei225 8,722.2 0.0%
1500 1.30 MAR 2.30 2.30 0.00 Brent spot 111.1 111.1 Oslo 384.78 0.7%
27-Oct 16-Nov 6-Dec JUN 1.86 1.86 0.00 Brent 1m 111.3 110.8 Stockholm 446.47 -1.1%
EURUSD ra. Gold SEP 1.62 1.62 0.00 Spot gold 1708.0 1708.0 Copenhagen 500.04 0.0%
Sources to all tables and graphics: Reuters and DNB Markets
Morning Report
07.12.2011
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