Morning Report

23.01.2013

More German optimism

NOK & 3m NIBOR 7.60 1.88 1.86 7.50 1.84 7.40 1.82 7.30 1.80 7.20 1.78 20-Dec 09-Jan 23-Jan
EURNOK 3m(rha)

The ZEW-index, which measures optimism among German financial analysts, rose unexpectedly in January. This contributed positively to the European stock markets yesterday. The market reacted immediately very little to Bank of Japan's shift in monetary policy yesterday morning. This may be due to the fact that much was priced in beforehand, that the outcome was somewhat disappointing (open ended only from 2014 onwards), and that there were two representatives who opposed the change. However, the yen strengthened significantly against the dollar throughout the day and is now back at the levels from Friday. There was also a slight decline on European stock exchanges yesterday, a slight rise in the U.S., while Asia has declined moderately overnight. Spain yesterday conducted a very successful auction of 7 boll. In ten-year government bonds at a rate slightly above 5%. Despite the fact that the Italian elections are approaching (elections will be held on 24 and 25 February), there are currently no signs of increased economic uncertainty. On the contrary, the yield on Italian ten-year government bond has dropped sharply in January. So far, the bottom of 4.12% was reached 11. January - the lowest level since 15. November 2010. Yesterday's ZEW index for the German economy was a positive surprise. The benchmark index, which measures future expectations rose from 6.9 in December to 31.5 in January. This is the highest level since May 2010. A rise to 12.0 was expected. The assessments of the current situation in Germany, however, remained virtually unchanged in recent months. Future indicator shows that analysts in the financial market have become significantly more optimistic about Germany's economy in recent months. This is perhaps not so surprising in light of the improvement in financial markets since last summer. More surprisingly, however, the analysts are as optimistic about the euro zone (index 31.2). Even more optimism is found in the view of the United States (35.0), while there is less optimism for the United Kingdom (18.4), Italy (19.6) and especially France (6.9). The survey also shows that analysts are optimistic about the German (and European) stocks, and that a large majority (61.4%) expect higher German long rates. This morning the French business sentiment index from INSEE (the statistics agency) was released, and it showed a sharp drop from 89 to 86. Existing home sales in the U.S. fell slightly in December. The decline was 1.0% and the sale ended at 4.94 million units (annual rate). A similar increase was expected, and last month's sharp increase in sales was revised down slightly. The strong growth in November means that we are not particularly concerned about the decline in December. The underlying trend is positive (sales have risen nearly 13% over last year) and as we wrote in yesterday's report, the housing market is definitely on the right track. Pending home sales increased sharply in December, which points at higher sales over the next two months. The number of unsold homes fell sharply, indicating that prices will continue to increase. Today released FHFA house prices for November. Prices rose 0.5% in October. The latest signals regarding debt ceiling suggests that Republicans will vote for a short-term elevation of the ceiling during this week. This is to ensure public payments until a longer-term budget deal is in place. The deadline for such an agreement is set to 1 March. The fundamental discussion of the long-term challenges for fiscal policy should start soon. Yesterday's figures from the United Kingdom were of mixed quality. The business sentiment index from CBI (Confederation of British Industries), showed an increase in the quarterly benchmark index from -12 in the fourth quarter to 0 in first. The expected production index rose from December to January. On the other hand new orders fell, and was dragged down by export orders. The latter is at its lowest level since December 2011. The public finances in the UK continued to deteriorate in December. Revenues increased but expenditures rose more. Hence the borrowing requirements also rose. Today the minutes from the monetary policy meeting in early January will be released. In the previous meetings, a clear majority has refrained from further quantitative easing. It will be interesting to see if more than David Miles wanted to increase the purchases of securities at the January meeting. In addition, the figures for the UK job market are out today. It is expected that unemployment will remain stable. knut.magnussen@dnb.no

Norsk 10y sov.

2.6 2.4 2.2 2.0 1.8 20-Dec
rente

09-Jan

100 80 60 40 20 0 23-Jan
Diff(bp,rha)

Headquarters 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

+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 62 96 80 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

Yesterdays key economic events (GMT) 10:00 Germany ZEW 11:00 UK CBI Orders 15:00 USA Existing Home Sales Todays key economic events (GMT) 08:45 Frankrike INSEE bedriftstillit 10:30 UK Referat rentemte BoE 15:00 USA Boligpris (FHFA)

As of Jan Jan Dec As of jan jan nov

Unit Index Index mn Unit indeks m/m %

Prior

Poll

Actual

6.9 12.0 31.5 -12.0 -11.0 -20 5.040 5.100 4.960 Prior Poll DNB 89.0 0.5 90.0

Morning Report
23.01.2013

3m LIBOR
0.15 0.14 0.13 0.12 0.11 20-Dec
EUR

09-Jan

0.32 0.31 0.31 0.30 0.30 23-Jan

USD(rha)

NOK & 3m NIBOR 7.60 1.88 1.86 7.50 1.84 7.40 1.82 7.30 1.80 7.20 1.78 20-Dec 09-Jan 23-Jan
EURNOK 3m(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 89.19 1.3346 0.8420 7.4626 8.6803 1.2427 7.4612 5.5911 6.27 85.99 99.96 8.862 6.006

Today 88.23 1.3309 0.8409 7.4634 8.6750 1.2367 7.4303 5.5837 6.33 85.74 99.56 8.838 6.011

Spot rates and forecasts In 1m Apr-13 Jul-13 Jan-14 FX 0700 -1.1 88 90 91 93 AUD -0.3 1.33 1.32 1.36 1.37 CAD -0.1 0.82 0.81 0.85 0.86 CHF 0.0 7.45 7.45 7.45 7.45 CZK -0.1 8.65 8.65 8.60 8.70 RUB -0.5 1.20 1.20 1.20 1.20 GBP -0.4 7.30 7.25 7.25 7.40 HKD -0.1 5.49 5.49 5.33 5.40 KWD 1.0 6.24 6.10 5.86 5.81 LTL -0.3 84.4 83.8 84.3 85.1 LVL -0.4 98.0 97.3 97.3 99.3 NZD -0.3 8.90 8.95 8.53 8.60 SEK 0.1 608.33 604.17 604.17 592.00 SGD

USD NOK 1.054 5.885 0.993 5.623 0.929 600.717 19.255 28.989 30.233 18.462 1.583 8.834 7.753 0.720 0.282 19.812 2.594 2.152 0.524 10.647 0.841 4.696 6.517 85.645 1.227 4.547

US dollar

5.7 5.6 5.5 5.4 20-Dec

1.35 1.30
09-Jan

1.25 23-Jan
EURUSD(rha)

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

Prior 1.80 1.86 1.98 2.21 2.28 2.59 2.89 3.23

Last 1.81 1.86 1.99 2.23 2.28 2.61 2.89 3.23

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

Interest rates Prior 0.20 0.30 0.48 0.81 0.49 0.87 1.33 1.85

Last 0.20 0.30 0.48 0.81 0.49 0.87 1.33 1.85

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

Prior 0.05 0.13 0.25 0.47 0.70 1.03 1.35 1.75

Last 0.05 0.14 0.25 0.47 0.68 1.02 1.35 1.75

USDNOK

Japanese yen

95.0 90.0
85.0

8.0 7.0
09-Jan

Norw ay NST475 10y yld - US spread

Prior 96.10 2.43 0.57

Last 95.75 2.47 0.64

Governm ent bonds US Prior Last 10y 97.86 98.17 10y yld 1.86 1.83 30y yld 3.05 3.01 Interest rate forecasts US 3m libor 10y sw ap Apr-13 0.35 2.00 Jul-13 0.35 2.00 Jan-14 0.35 2.25

Germany 10y 10y yld - US spread

Prior 99.14 1.59 -0.27

Last 99.31 1.58 -0.25

80.0 20-Dec
USDJ PY

6.0 23-Jan
JPYNOK(rha)

Norw ay Apr-13 Jul-13 Jan-14

3m nibor 1.85 1.85 1.85

10y sw ap 3.25 3.25 3.50

Germany Apr-13 Jul-13 Jan-14

3m euribor 10y sw ap 0.25 1.75 0.25 1.75 0.25 2.00

SEKNOK & CHFNOK 87 86 85 84 83 20-Dec 09-Jan

SEKNOK CHFNOK(rha)

6.2 6.1 6.0 5.9 5.8 23-Jan

Equities
14200 13700 13200 12700 12200 20Dec 09-Jan
Dow J.I.

470 460 450 440 430 23-Jan

Os lo(rha)

NOK sov. NST19 NST20 NST21 NST471 NST472 NST473 NST475 NST475 NOK FRA MAR JUN SEP DEC

Miscellaneous Prior Last Change Maturity year rem. NOK-index TWI Prior 2.32 2.34 2 19.06.2013 0.40 Last 91.02 91.29 1.89 1.90 1 18.09.2013 0.65 Oil price: (Ldn,cl) 1m 1.89 1.69 -19 18.12.2013 0.90 SPOT 113.14 112.32 1.52 1.58 6 15.05.2015 2.31 Gold price 22.01.2013 PM 1.76 1.84 7 19.05.2017 4.32 AM: 1687.5 1690.5 1.96 2.03 7 22.05.2019 6.33 Equities Today 0700 % last 2.39 2.46 7 24.05.2023 10.34 Dow Jones 13712.21 0.5% 2.43 2.47 4 24.05.2023 10.34 Nasdaq C. 3143.18 0.3% 3 mnd 6 mnd NOK NIDR NIBOR FTSE100 6179.17 0.0% 1.88 2.01 1m 1.87 1.81 Eurostoxx50 2716.70 -0.4% 1.88 2.05 3m 1.98 1.86 DAX 7696.21 -0.7% 1.92 2.09 6m 2.10 1.99 Nikkei 225 10486.99 -2.1% 1.99 2.17 12m 2.30 2.23 OSEBX 465.25 -0.6% Sources to all tables and graphics: Thomson Reuters, Thomson Datastream and DNB Markets

Morning Report
23.01.2013
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