Morning Report

29.01.2013

Two-tier Norwegian Industry

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 31-Dec 15-Jan 29-Jan
EURNOK 3m(rha)

Statistics Norways Economic Tendency Survey supports the picture of a two-tier Norwegian manufacturing industry. Exporters of traditional manufactured products face weak demand from global markets, while producers of capital goods for the petroleum industry face capacity constraints In the U.S. the S&P500 fell by 0.2 percent, while the Nasdaq had an equivalent growth. Also in European stock markets the fluctuations were modest yesterday. Eurostoxx50 were unchanged, FTSE rose 0.2 percent, while the Oslo Stock Exchange's BMI fell 0.8 percent. 10-year U.S. Treasury and German 10y Bund yield fell back a few basis points yesterday. In currency markets, the euro was little changed against the dollar in the past day. Swedish krona, however, has strengthened 0.8 percent against the euro after positive retail sales figures. The Norwegian krone has depreciated slightly against both the dollar and the euro sine yesterday morning, and the import-weighted index (I44) has climbed over 85. It is thus still stronger than Norges Bank assumed for the first quarter. Weak export markets weigh on Norwegian manufacturers: Industrial managers surveyed by Statistics Norway report that growth in total output and employment weakened in Q4 2012. This was due to a further decline in new orders from export markets. 2012 ended particularly badly for sectors producing intermediate goods like wood and wood products, paper and paper products and nonferrous metals. Total stocks declined and market prices fell. The conditions are expected to improve slightly in Q1 2013. For enterprises supplying the oil and gas sector the situation is completely different. These include sectors producing capital goods like machinery and equipment, ships, boats and oil platforms, repair and installation. Total stocks of orders are huge, and output and employment has increased further. A shortage of qualified labour has hampered growth in production. Demand is strong and prices in domestic markets have increased. The general outlook for Q1 is considered to be positive. Investment plans are adjusted upwards. Sectors producing food products and beverages also face solid demand. Production and employment has increased, and prices have improved. The general outlook is considered to be positive. Producers of other consumer goods, like printing and production of furniture, are in a more difficult position. Overall the general short-term outlook for production and employment is considered to be better. The industrial confidence indicator increased from 1 in Q3 to 5 in Q4. Values above zero indicate higher output in the upcoming period. In Sweden consumption held up well in December, despite a further decline in the consumer confidence index. Retail sales rose by 1.2 per cent m/m, after a 0.4 per cent rise in November. For Q4 however, retail sales fell by an annualized 1.0 per cent. The value of exports has declined continuously since July 2011. Throughout 2012 the monthly drops deepened. In December exports fell by 1.0 per cent m/m. Unadjusted exports dropped substantially I December to levels last seen under the Great recession. From Q3 to Q4 exports fell by 3.3 per cent annualized. Imports fell by 2.8 per cent in the same period, pointing to a slight negative contribution from foreign trade in the forthcoming Q4 national accounts. In the U.S. durable orders increased 4.6 per cent m/m in December, versus expected 1.8 per cent. Underlying (3m/3m annualized) rose from 5.1 per cent in November to 17.5 per cent in December. But the increase was caused by the volatile components aircrafts and parts (23.2 per cent m/m) and defense (67.6 per cent m/m) that. Excluding aircraft and defense orders rose by 0.2 per cent m/m. Total shipments rose by 1.3 per cent while the core rose 0.3 per cent. After Friday's figures showed a decline in new homes sale, we received yesterday another weak housing market figure. Pending home sales fell 4.3 per cent from November to December, after rising 1.6 per cent the month before. It was clearly below expectations of 0.3 per cent. Pending home sales are based on signed contracts and are a good indicator of actual sales of existing homes1-2 months later. Despite the fall in December, the trend is still positive. This indicates a further rise in sales of existing homes in 2013. In the Euro zone, the broad money supply (M3) rose by 3.3 percent year/year in December. It was lower than expected (3.9 per cent) and lower than in November (3.8 per cent). Corporate and consumer loans fell respectively 2.3 per cent and 2.9 per cent y/y, while mortgage rose 1.3 per cent. These figures were little change from the previous month. kyrre.aamdal@dnb.no Yesterdays key economic events (GMT) 08:30 Sweden Retail sales Economic Tendency 09:00 Norway Survey Orders 13:30 USA Durable Todays key economic events (GMT) 07:00 Germany Gfk Consumer Confidence 07:45 France Consumer Confidence Case-Shiller 20 cities 14:00 USA ccitieesbyeboligpriser As of Dec Q4 Dec As of Feb Jan Nov Unit M/m % Index M/m % Unit Index Index M/m % Prior 0.3 1 0.8 Prior 5.6 86.0 0.7 Poll 0.3 1.0 Poll 5.6 85.0 0.6 Actual 0.2 5 4.6 DNB

Norsk 10y sov.

2.8 2.6 2.4 2.2 2.0 1.8 31-Dec
rente

15-Jan

100 80 60 40 20 0 29-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

Morning Report
29.01.2013

3m LIBOR
0.15 0.14 0.13 0.12 0.11 31-Dec
EUR

15-Jan

0.32 0.31 0.31 0.30 0.30 29-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 31-Dec 15-Jan 29-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 90.97 1.3458 0.8542 7.4631 8.6990 1.2499 7.4442 5.5308 6.08 85.64 99.73 8.716 5.957

Today 90.74 1.3439 0.8564 7.4607 8.6359 1.2445 7.4478 5.5425 6.11 86.33 99.88 8.701 5.987

Spot rates and forecasts In 1m Apr-13 Jul-13 Jan-14 FX 0700 -0.3 88 90 91 93 AUD -0.1 1.33 1.32 1.36 1.37 CAD 0.3 0.82 0.81 0.85 0.86 CHF 0.0 7.45 7.45 7.45 7.45 CZK -0.7 8.65 8.65 8.60 8.70 RUB -0.4 1.20 1.20 1.20 1.20 GBP 0.0 7.30 7.25 7.25 7.40 HKD 0.2 5.49 5.49 5.33 5.40 KWD 0.4 6.24 6.10 5.86 5.81 LTL 0.8 84.4 83.8 84.3 85.1 LVL 0.2 98.0 97.3 97.3 99.3 NZD -0.2 8.90 8.95 8.53 8.60 SEK 0.5 608.33 604.17 604.17 592.00 SGD

USD NOK 1.045 5.788 1.006 5.506 0.926 598.407 19.115 28.987 30.156 18.374 1.570 8.698 7.758 0.714 0.281 19.685 2.569 2.157 0.520 10.656 0.836 4.633 6.425 86.235 1.236 4.484

US dollar

5.7 5.6 5.5 5.4 31-Dec

15-Jan

1.40 1.35 1.30 1.25 29-Jan

EURUSD(rha)

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

Prior 1.81 1.85 1.99 2.23 2.35 2.68 2.95 3.29

Last 1.81 1.84 1.96 2.20 2.39 2.72 3.00 3.32

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

Prior 1.13 1.18 1.28 1.54 1.53 1.84 2.09 2.33

Interest rates Last USD 1.13 1m 1.18 3m 1.28 6m 1.54 12m 1.53 3y 1.85 5y 2.10 7y 2.33 10y

Prior 0.20 0.30 0.48 0.80 0.54 0.95 1.44 1.96

Last 0.20 0.30 0.48 0.80 0.57 1.00 1.48 2.02

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

Prior 0.05 0.14 0.25 0.47 0.81 1.13 1.44 1.83

Last 0.05 0.15 0.27 0.49 0.85 1.19 1.50 1.87 Last 98.29 1.69 -0.29 10y sw ap 1.75 1.75 2.00

USDNOK

Japanese yen

95.0 90.0
85.0

8.0 7.0
15-Jan

Norw ay Prior NST475 95.50 10y yld 2.50 - US spread 0.55 3m nibor 1.85 1.85 1.85

80.0 31-Dec
USDJ PY

6.0 29-Jan
JPYNOK(rha)

Norw ay Apr-13 Jul-13 Jan-14

Governm ent bonds Last SEK Prior Last US Prior 94.75 10y 113.46 113.51 10y 97.06 2.59 10y yld 1.91 1.91 10y yld 1.95 0.61 - US spread -0.04 -0.07 30y yld 3.14 Interest rate forecasts 10y 10y Sw eden 3m libor USA 3m libor sw ap sw ap 3.25 3.25 3.50 Apr-13 Jul-13 Jan-14 1.10 1.10 1.10 2.25 2.25 2.50 Apr-13 Jul-13 Jan-14 0.35 0.35 0.35

Last Germany Prior 96.86 10y 98.72 1.98 10y yld 1.64 3.15 - US spread -0.32 10y sw ap 2.00 2.00 2.25 3m euribor 0.25 0.25 0.25

Germany Apr-13 Jul-13 Jan-14

SEKNOK & CHFNOK 87 86 85 84 83 31-Dec 15-Jan

SEKNOK CHFNOK(rha)

6.2 6.1 6.0 5.9 5.8 29-Jan

Equities
14200 13700 13200 12700 12200 31Dec 15-Jan
Dow J.I.

480 470 460 450 440 430 29-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 2.42 2.44 2 19.06.2013 0.39 Last 90.81 90.60 1.94 1.95 1 18.09.2013 0.64 Oil price: (Ldn,cl) 1m 1.93 1.70 -23 18.12.2013 0.88 SPOT 115.30 113.67 1.64 1.76 12 15.05.2015 2.29 Gold price 28.01.2013 PM 1.90 1.99 9 19.05.2017 4.30 AM: 1660.0 1656.5 2.06 2.14 8 22.05.2019 6.31 Equities Today 0700 % last 2.48 2.56 8 24.05.2023 10.32 Dow Jones 13881.93 -0.1% 2.50 2.59 9 24.05.2023 10.32 Nasdaq C. 3154.30 0.1% 3 mnd 6 mnd NOK NIDR NIBOR FTSE100 6294.41 0.2% 1.88 2.03 1m 1.89 1.81 Eurostoxx50 2744.50 0.0% 1.93 2.08 3m 1.97 1.84 DAX 7833.00 -0.3% 2.01 2.16 6m 2.10 1.96 Nikkei 225 10866.72 0.4% 2.11 2.28 12m 2.31 2.20 OSEBX 467.38 -0.8% Sources to all tables and graphics: Thomson Reuters, Thomson Datastream and DNB Markets

Morning Report
29.01.2013
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