Morning Report

13.11.2012

Greece gets two more years

NOK & 3m NIBOR 7.50 7.40 7.30 7.20 03Oct
3m ra.

Greece will have two years to reach the target for the budget deficit. But no agreement was made on the funding ofthese two years, or what to do with the Greek debt level.
2.00 1.90 1.80 1.70

23Oct

12Nov
EURNOK

SEK & 3m STIBOR 8.7 8.6 8.5 8.4 03Oct

3m ra.

1.70 1.60 1.50 1.40 1.30 23Oct 12Nov

EURSEK

Finance ministers of the euro zone decided at yesterday's meeting that Greece will have two more years to reach the target for the budget deficit. In 2016 the budget deficit must not exceed 2% of GDP.How this is to be funded, was however not determined. A report by the EU, IMF and ECB estimates the additional funding needs to 32.6 billion euros until 2016. The decision was put on hold until next week, when euro zone finance ministers meet again. But there is a clear disagreement between euro zone leaders and IMF on when the Greek debt should be "sustainable", or down at 120% of GDP. At yesterday's meeting, the finance ministers extended the deadline by two years, until 2022. However, IMF disagrees. They stick to the original plan of 2020. A consensus among all members of the troika is required for the tranche of 31.8 billion euros that have been held back since June, to be paid. Yesterdays agreement did not include any solution to Fridays debt redemption of 5 billion euros. This has been a concern in the market lately. But Greece intends to roll these funds over, by issuing one- and three months bills worth 3,125 billion euro today. The last time Greece raised money over three months was in the middle of October, and even though the interest rate came in at 4.24%, it should not cause any problems. Order reserves in Norwegian industry still remains high, and rose by 0.9% from the second to third quarter. New orders fell by 27% in the same period, but the numbers are very volatile. For ships and platforms orders fell by 65% which is due to very high reported orders in the second quarter. The decline in new orders is mainly attributed to the domestic market. While there was a decline in order reserves in traditional export industries, the order reserves in the export industry as a whole increased. Increased uncertainty in the euro area in general, and the outcome of the meeting of eurozone finance ministers in particular, contributed to the European stock markets ended the day in red. Expectations of an agreement between Republicans and Democrats that would prevent automatic spending cuts in government spending and increased taxes contributed to a small increase in the U.S. stock markets yesterday. In fixed income markets Norwegian government bond yields continued to edge up yesterday, despite the fact that both the German and U.S. bond yields dropped. The government loan facility that was announced Friday was surprisingly large, but how much of the facility the Treasury will use is uncertain. And with continued uncertainty in the euro area, Spanish and Italian interest rates increased further. 10-year interest rate in Italy is now above the 5%-mark, while in Spain it is approaching 6%. Despite the agreement in the euro zone, the difficult decisions on funding were deferred and uncertainty is thereby still intact. Thus the euro continues to weaken against the dollar, while the Japanese yen appreciates. More data on the agenda today than yesterday. We get inflation figures from both Sweden and the UK. Inflation in Sweden has been low for a long time, and we expect the numbers for October to also be below the expectations of the central bank (we expect CPIF in October at 1.0% y/y, Riksbanken 1.1%, consensus 1.2%). Inflation in the UK is expected to rise 2.4% y/y in October, up from 2.2% in September. Inflation in the UK has been above the target of 2% since 2009, but has gradually declined over the past year. Now it is expected that higher energy and food prices will contribute to a rise in inflation again, and Governor King expects that inflation will remain above target well into next year. The German ZEW index is expected to show an increase for the third consecutive month, despite several weak figures from German industry lately. Deputy Governor Qvigstad speaks at the Norwegian Academy of Science and Letters in the afternoon, and the speech is published in its entirety. EU finance ministers meet today and will try to agree on how the new bank surveillance will be organized. And both Greece and Italy issues debt today. magne.ostnor@dnb.no

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Sales Oslo (+47) Equity Fixed Income

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Regional sales (+47) Bergen Bod Fredrikstad Hamar Haugesund Lillehammer Kristiansand Oslo Stavanger Troms Trondheim Tnsberg lesund

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Research Regional Sales (+47) Eirik Larsen 22 01 76 55

Research FX/IR (+47) ystein Drum Kjersti Haugland Ole Andr Kjennerud Knut A. Magnussen Camilla Viland Magne stnor Kyrre Aamdal

22 01 76 56 22 01 78 03 22 01 78 24 22 01 76 63 22 01 77 41 22 01 76 57 22 01 76 67

Credit Research (+47) Ole Einar Stokstad Mikael L. Gjerding Rolv Kristian Heitmann Thomas Larsen Knut Olav Rnningen

22 01 78 37 22 01 77 62 22 01 76 77 22 01 77 36 22 01 78 15

As of Yesterdays key economic events (GMT) 09:00 Norway Manufacturing orders Q3 Global IEA publishes World Energy Outlook EMU Eurogroup-meeting As of Todays key economic events (GMT) 08:30 Sweden CPI Oct 09:30 UK CPI Oct 10:00 Germany ZEW-index Oct

Unit q/q % Unit y/y % y/y % Index

Prior 31.8 Prior 0.4 2.2 -11.5

Poll

Actual

Poll 0.5 2.3 -10.0

DNB 0.3

Morning Report
13.11.2012
SPOT RATES AND FORECASTS
FX USDJPY EURUSD EURGBP EURCHF EURNOK EURSEK EURDKK USDNOK JPYNOK SEKNOK GBPNOK USDSEK JPYSEK NOKSEK GBPSEK Prior 79.51 1.271 0.801 1.205 7.308 8.591 7.458 5.748 7.231 0.851 9.132 6.761 8.500 1.177 10.726 Last 79.31 1.269 0.799 1.205 7.305 8.594 7.458 5.757 7.260 0.851 9.143 6.773 8.542 1.177 10.753 % -0.3% -0.2% -0.2% 0.0% 0.0% 0.0% 0.0% 0.2% 0.4% -0.1% 0.1% 0.2% 0.5% 0.1% 0.3% In 1 m ...3 m 78 76 1.27 1.20 0.80 0.78 1.20 1.20 7.30 7.25 8.55 8.55 7.45 7.45 5.75 6.04 7.37 7.95 0.85 0.86 9.1 9.3 6.73 7.13 5.25 5.42 1.17 1.17 10.69 10.84 ...6 m ...12 m 76 78 1.20 1.25 0.78 0.80 1.20 1.20 7.25 7.40 8.50 8.60 7.45 7.45 6.04 5.92 7.95 7.59 0.86 0.87 9.3 9.3 7.08 6.88 5.38 5.37 1.16 1.15 10.82 10.63 FX AUD CAD CHF CZK DKK GBP HKD ISK KWD LTL LVL NZD PLN SGD RUB USD 1.0414 1.0003 0.9496 19.99 5.8778 1.5876 7.7508 129.31 0.2826 2.7213 0.5491 0.8175 3.2870 1.2238 31.7105 % -0.15% 0.02% 0.06% -0.06% 0.15% -0.01% -0.01% 0.16% -0.04% 0.13% 0.15% -0.01% 0.26% 0.07% 0.30%

Oil spot & NOK TWI 1.00 0.50 0.00 03-Oct 23-Oct 12Nov
$/b

94 92 90

NOK TWI ra.

EUR vs GBP & CHF 1.22 1.21 1.21 1.20 03Oct

GBP r.a

0.82 0.81 0.80 0.79 0.78 23Oct 12Nov

CHF

EURSEK & OMXS 8.7 8.6 8.5 8.4 03Oct

OMXS ra.

520 500 480 23Oct 12Nov

EURSEK

Gov. Bonds, 10y 1.80 1.60 1.40 1.20 03Oct 23Oct 12Nov
SEK NOK, ra.

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

NIBOR Prior 1.82 1.91 2.09 2.22 2.25 2.53 2.83 3.16

SWAP AND MONEYMARKET RATES STIBOR EURIBOR Last Prior Last Prior 1.83 1.40 1.39 0.06 1.91 1.47 1.46 0.13 2.10 1.57 1.56 0.26 2.24 1.67 1.65 0.38 2.24 1.29 1.29 0.51 2.54 1.50 1.50 0.85 2.83 1.75 1.75 1.25 3.16 2.00 2.00 1.67

Last 0.06 0.13 0.26 0.38 0.51 0.85 1.25 1.68

USD LIBOR Prior 0.21 0.31 0.53 0.70 0.47 0.77 1.17 1.64

Last 0.21 0.31 0.53 0.70 0.47 0.78 1.15 1.62

2.20 2.00 1.80

10y
JPY and Dow Jones 14.0 82 13.5 80 13.0 78 12.5 12.0 76 032312Oct Oct Nov
USDJPY ra. DowJones, 1000

NORWAY Prior Last NO9YT=RR 99.33 2.04 0.69 2.07 0.73

GOVERNMENT BONDS SWEDEN GERMANY Prior Last Prior Last 118.54 118.64 101.404 101.46 1.41 0.06 1.40 0.06 1.35 1.34

US Prior 100.1094 1.61 0.27

Last 100.33 1.60 0.26

10y yield vs bund

USD and gold 1800 1700 1600 03Oct 23Oct 12Nov

Gold

1.35 1.30 1.25

EURUSD ra.

INTEREST RATE FORECASTS NORWAY SWEDEN GERMANY US 3m nibor 10y sw ap 3m stibor 10y sw ap 3m euribor 10y sw ap 3m libor 10y sw ap In 3m 1.90 3.25 1.30 2.25 0.35 1.75 0.45 1.75 6m 1.90 3.25 1.30 2.25 0.25 1.75 0.45 1.75 12m 2.15 3.50 1.30 2.50 0.25 2.00 0.45 2.25 MISCELLANEOUS FRA NOK 3m Prior chg TWI Today % Stock ex. Today % DEC 1.89 1.89 0.00 NOK 91.35 0.03 Dow Jones 12 815.4 0.0% MAR 1.87 1.87 0.00 SEK 114.36 0.10 Nasdaq 2 904.3 0.0% JUN 1.86 1.87 -0.01 EUR 100.07 - 0.19 S&P 500 1 379.9 0.2% SEP 1.88 1.88 0.00 USD 81.13 0.08 Eurostoxx50 2 473.5 -0.3% FRA SEK 3m Prior chg GBP 83.60 Dax 7 168.8 0.1% DEC 1.40 1.40 0.00 Comm. Today Last Nikkei225 8 661.1 0.0% MAR 1.21 1.21 0.00 Brent spot 111.3 ough res Oslo 435.71 -0.2% JUN 1.13 1.13 0.00 Brent 1m 108.7 109.1 Stockholm 499.00 0.1% SEP 1.12 1.13 -0.01 Spot gold 0.0 1735.3 Copenhagen 636.86 -0.5% Sources to all tables and graphics: Reuters and DNB Markets

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