Morning Report

24.05.2013

Shaky markets
NOK & 3m NIBOR
7.70 7.60 7.50 7.40 7.30 1.90

Yesterdays key figures from both the EMU and USA came out stronger than expected. Still market developments were driven by fear and search for safe havens. Both the JPY and the CHF has strengthened, while the NOK has weakened.
1.80
1.70

19-Apr

07-May

1.60 24-May
3m (rha)

EURNOK

Concerns that the US Federal Reserve may soon cut back on asset purchases and signs of a slowdown in the Chinese economy weighed on risk sentiment yesterday. The Japanese stock market ended yesterday session down by 7.3 per cent. European and US stock markets also fell. The Norwegian stock market fell 1.7 per cent, its biggest daily decline so far in 2013. The Japanese stock market has continued to slide today as the BoJ Governor, Kuroda, said the central bank had announced sufficient stimulus. Lower risk appetite has fuelled demand for traditional safe haven currencies like the Swiss franc and the yen and both currencies have strengthened. A poorer risk sentiment is also a likely explanation of the weakening of the Norwegian krone. Some investors may be less comfortable with large long NOK positions in such a market. US housing market figures came out stronger than expected . According to Federal Housing Finance Agency, US home prices rose by 1.3 per cent in March. House prices have now been rising fourteen months in a row. Since January 2012, home prices are up by about 9 per cent. Furthermore new home sales were up 2.3 per cent, to 454 units in April. Consensus had expected 425. The median price for new homes was USD 271.6, up 14.9 per cent from a year ago. This is the highest price level ever (data back to early 1960s). The positive developments in the housing market are good news for the US economy. The weekly labour market data were also stronger than expected. The number of Americans filing for new claims fell by 23 last week, to 340 (expected 345). The four week average also declined and is currently at 339.5. In general a reading below 350 is seen of a sign of a tightening labour market. Yesterdays figures, thus, indicate that the improvement in the US labour market continues. Bernanke and the Federal Reserve on Wednesday indicated that they still find the labour market to be weak, despite of the latest improvement. They likely need to see clearer signs of a strengthening of the labour market and the general economy before they will start to cut back on their asset purchases. We believe this process will start in Q3. The key figures released from the euro area yesterday were also positive. The Euro area PMI flash estimate for May was stronger than expected . Total PMI rose from 46.9 to 47.7, versus expectations of 47.2. The index is as a result at the strongest levels since January, but remains below the 50 mark. As a result the index point towards further declines in economic activity, but at a slower pace than before. A positive feature is that the German index rises by 1.1 points and is as a result again approaching the 50 mark (49.9). The French index also rose, but remains at subdued levels. It is also worth mentioning that both the services and the manufacturing index rose this month. The latter was pulled up by a strong rise in manufacturing orders. This is encouraging! Sentiment among the consumers is also increasing. According to data from the European Commission, the consumer confidence index rose, in line with expectations, from -22.3 to -21.9 in April. This was the sixth monthly improvement in a row. Revised GDP figures show that British GDP grew by 0.3 per cent in Q1, as previously reported. It is positive that the economy is growing. However, the details are not as encouraging. The main contributor to growth in the first quarter was inventories. Household spending also contributed positively, but only by 0.1 per cent, the weakest since Q3 2011. Investments and net exports declined. The most important key figure on the agenda today seems to be US order figures for April. In March durable goods orders fell by nearly six per cent, much more than expected (-2.8% m/m). But the sharp decline was mainly due to aircraft and defense orders, which tend to be very volatile. Durable goods orders are expected to have been stronger in April, and consensus expect an increase of 1.1%. We also get sentiment indexes from Germany (IFO) and France (INSEE) today. Both indices declined in April, and are expected to pick up marginally this month. [email protected]

Norw ay: 10y Gov't Bond

95

85
75 07-May

65 24-May
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

Yesterdays key economic events (GMT) 09:00 MU PMI composite (flash) 13:30 USA Intital claims 15:00 USA New home sales Todays key economic events (GMT) 07:45 France INSEE business climate 09:00 Germany IFO, total 13:30 USA Durable goods orders

As of May W19 Apr As of May May Apr

Unit Index Mill Mn Unit Index Index m/m%

Prior 46.9 363r 0.444r Prior 88.0 104.4 -5.8

Poll 47.2 345 0.425 Poll 89.0 104.5 1.1

Actual 47.7 340 0.454 DNB

Morning Report
24.05.2013

3m LIBOR
0.140 0.130 0.120 0.110 0.100 0.28 0.28 0.27 0.27 0.27 24-May
USD (rha)

19-Apr
EUR

07-May

Oil price & NOK TWI

105
100

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 102.52 1.2848 0.8541 7.4539 8.5528 1.2551 7.4986 5.8348 5.69 87.70 100.60 8.785 5.976

Today 101.49 1.2932 0.8562 7.4546 8.5926 1.2501 7.5360 5.8295 5.75 87.79 101.12 8.806 6.032

Spot rates and forecasts In 1m Aug-13 Nov-13 May-14 FX 0700 -1.0 102 105 107 110 AUD 0.7 1.27 1.26 1.30 1.32 CAD 0.2 0.85 0.85 0.86 0.87 CHF 0.0 7.45 7.45 7.45 7.45 CZK 0.5 8.55 8.45 8.50 8.60 RUB -0.4 1.24 1.25 1.27 1.30 GBP 0.5 7.55 7.50 7.45 7.40 HKD -0.1 5.94 5.95 5.73 5.61 KWD 0.9 5.83 5.67 5.36 5.10 LTL 0.1 88.3 88.8 87.6 86.0 LVL 0.5 101.3 100.7 100.0 99.3 NZD 0.2 8.88 8.82 8.66 8.51 SEK 1.0 608.87 600.00 586.61 569.23 SGD

USD NOK 0.969 5.645 1.032 5.646 0.967 602.709 20.229 28.798 31.410 18.547 1.510 8.799 7.763 0.750 0.287 20.323 2.671 2.181 0.542 10.756 0.810 4.720 6.644 87.683 1.266 4.601

19-Apr

07-May

95 24-May
USD/b (rha)

NOK TWI

US dollar 6.0 5.9 5.9 5.8 5.8 5.7 5.7

1.33 1.31 1.29 1.27 1.25 24-May

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

Prior 1.65 1.75 1.84 2.03 1.99 2.31 2.65 3.02

Last 1.64 1.75 1.84 2.04 2.02 2.34 2.69 3.05

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

Prior 1.15 1.20 1.25 1.35 1.64 1.93 2.23

Interest rates Last USD 1.15 1m 1.20 3m 1.25 6m #N/A 12m 1.36 3y 1.64 5y 1.93 7y 2.23 10y

Prior 0.20 0.27 0.42 0.69 0.53 1.03 1.55 2.13

Last 0.19 0.27 0.42 0.69 0.54 1.04 1.56 2.14

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

Prior 0.06 0.12 0.20 0.38 0.49 0.82 1.19 1.66

Last 0.06 0.12 0.20 0.38 0.51 0.86 1.22 1.66

104.0 102.0 100.0 98.0 96.0 94.0

Japanese yen

19-Apr
USDJ PY

07-May

7.0 6.5 6.0 5.5 5.0 24-May

Norw ay Prior NST475 98.35 10y yld 2.19 - US spread 0.16 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 97.95 10y 96.81 96.81 10y 97.53 2.23 10y yld 1.84 1.84 10y yld 2.02 0.23 - US spread -0.18 -0.17 30y yld 3.20 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 Last 97.70 10y 101.00 100.53 2.00 10y yld 1.39 1.44 3.18 - US spread -0.63 -0.56 10y sw ap 2.00 2.00 2.50 3m euribor 0.25 0.25 0.25 10y sw ap 1.75 1.75 2.00

Germany Aug-13 Nov-13 May-14

JPYNOK(rha)

SEKNOK & CHFNOK

89
88

87 19-Apr 07-May
SEKNOK

6.3 6.2 6.1 6.0 5.9 5.8 24-May

Equities
15700 15200 14700 14200 13700 19-Apr
Dow Jones

500 480 460 440 420 07May 24May

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 1.42 1 18.09.2013 0.32 Last 91.91 91.60 1.37 1.35 -1 18.12.2013 0.57 Oil price: (Ldn,cl) 1m 1.46 1.46 0 19.03.2014 0.82 SPOT 101.16 102.31 1.16 1.17 1 15.05.2015 1.98 Gold price 23.05.2013 PM 1.39 1.41 2 19.05.2017 3.99 AM: 1408.5 1380.5 0.00 0.00 0 24.05.2023 10.01 Equities Today 0700 % last 2.17 2.21 4 24.05.2023 10.01 Dow Jones 15294.50 -0.1% 2.19 2.23 5 24.05.2023 10.01 Nasdaq C. 3459.42 -0.1% 3 mnd 6 mnd NOK NIDR NIBOR FTSE100 6696.79 -2.1% 1.78 1.86 1m 1.77 1.64 Eurostoxx50 2776.78 -2.1% 1.73 1.84 3m 1.87 1.75 DAX 8351.98 -2.1% 1.73 1.85 6m 1.93 1.84 Nikkei 225 14245.41 -1.7% 1.75 1.88 12m 2.07 2.04 OSEBX 486.12 -1.7% Sources to all tables and graphics: Thomson Reuters, Thomson Datastream and DNB Markets

Morning Report
24.05.2013
IMPORTANT/DISCLAIMER
This note (the Note) must be seen as marketing material and not as an investment recommendation within the meaning of the N orwegian Securities Trading Act of 2007 paragraph 3-10 and the Norwegian Securities Trading Regulation 2007/06/29 no. 876. The Note has been prepared by DNB Markets, a division of DNB Bank ASA, a Norwegian bank organized under the laws of the Kingdom of Norway (the Bank), for information purposes only. The Note shall not be used for any unlawful or unauthorized purposes. The Bank, its affiliates, and any third-party providers, as well as their directors, officers, shareholders, employees or agents (individually, each a DNB Party; collectively, DNB Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Note. DNB Parties are not responsible for any errors or omissions, regardless of the cause, nor for the results obtained from the use of the Note, nor for the security or maintenance of any data input by the user. The Note is provided on an as is basis. DNB PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE NOTES FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE NOTE WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall DNB Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the Note, even if advised of the possibility of such damages. Any opinions expressed herein reflect the Banks judgment at the time the Note was prepared and DNB Parties assume no obligation to update the Note in any form or format. The Note should not be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. No DNB Party is acting as fiduciary or investment advisor in connection with the dissemination of the Note. While the Note is based on information obtained from public sources that the Bank believes to be reliable, no DNB Party has performed an audit of, nor accepts any duty of due diligence or independent verification of, any information it receives. Confidentiality rules and internal rules restrict the exchange of information between different parts of the Bank and this may prevent employees of DNB Markets who are preparing the Note from utilizing or being aware of information available in DNB Markets/the Bank which may be relevant to the recipients of the Note. The Note is not an offer to buy or sell any security or other financial instrument or to participate in any investment strategy. Distribution of material like the Note is in certain jurisdictions restricted by law. Persons in possession of the Note should seek further guidance regarding such restrictions before distributing the Note. The Note is for clients only, and not for publication, and has been prepared for information purposes only by DNB Markets - a division of DNB Bank ASA registered in Norway with registration number NO 984 851 006 (the Register of Business Enterprises) under supervision of the Financial Supervisory Authority of Norway (Finanstilsynet), The Monetary Authority of Singapore, and on a limited basis by the Financial Conduct Authority and the Prudential Regulation Authority of the UK, and the Financial Supervisory Authority of Sweden. Details about the extent of our regulation by local authorities outside Norway are available from us on request. Additional information for clients in Singapore The Note has been distributed by the Singapore branch of DNB Bank ASA. It is intended for general circulation and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should seek advice from a financial adviser regarding the suitability of any product referred to in the Note, taking into account your specific financial objectives, financial situation or particular needs before making a commitment to purchase any such product. You have received a copy of the Note because you have been classified either as an accredited investor, an expert investor or as an institutional investor, as these terms have been defined under Singapores Financial Advisers Act (Cap. 110) (FAA) and/or the Financial Advisers Regulations (FAR). The Singapore branch of DNB Bank ASA is a financial adviser exempt from licensing under the FAA but is otherwise subject to the legal requirements of the FAA and of the FAR. By virtue of your status as an accredited investor or as an expert investor, the Singapore branch of DNB Bank ASA is, in respect of certain of its dealings with you or services rendered to you, exempt from having to comply with certain regulatory requirements of the FAA and FAR, including without limitation, sections 25, 27 and 36 of the FAA. Section 25 of the FAA requires a financial adviser to disclose material information concerning designated investment products which are recommended by the financial adviser to you as the client. Section 27 of the FAA requires a financial adviser to have a reasonable basis for making investment recommendations to you as the client. Section 36 of the FAA requires a financial adviser to include, within any circular or written communications in which he makes recommendations concerning securities, a statement of the nature of any interest which the financial adviser (and any person connected or associated with the financial adviser) might have in the securities. Please contact the Singapore branch of DNB Bank ASA at +65 6212 0753 in respect of any matters arising from, or in connection with, the Note. The Note is intended for and is to be circulated only to persons who are classified as an accredited investor, an expert investor or an institutional investor. If you are not an accredited investor, an expert investor or an institutional investor, please contact the Singapore branch of DNB Bank ASA at +65 6212 0753. We, the DNB group, our associates, officers and/or employees may have interests in any products referred to in the Note by acting in various roles including as distributor, holder of principal positions, adviser or lender. We, the DNB group, our associates, officers and/or employees may receive fees, brokerage or commissions for acting in those capacities. In addition, we, the DNB group, our associates, officers and/or employees may buy or sell products as principal or agent and may effect transactions which are not consistent with the information set out in the Note. Additional Information, including for Recipients in the In the United States: The Note does not constitute an offer to sell or buy a security and does not include information, opinions, or recommendations with respect to securities of an issuer or an analysis of a security or an issuer; rather, it is a market letter, as the term is defined in NASD Rule 2211.