Morning Report

01.02.2013

Weaker Yen, Stronger Euro

NOK & 3m NIBOR 7.60 1.90 7.50 1.85 7.40 1.80 7.30 7.20 1.75 04-Jan 18-Jan 01-Feb
EURNOK 3m(rha)

Since yesterday morning the Japanese Yen has weakened versus the USD, while the Euro has strengthened relative to USD. Equity markets paused yesterday. In the U.S., the DJIA and S&P500 fell respectively 0.4 and 0.3 percent from the day before. January, however, gave a rise in the DJIA of 5.8 percent and 5.1 percent for the S & P500. Also in Europe the major stock indices fell. 10-year Treasury yields rose a few points throughout the U.S. session and continued up in Asian trade. It was small changes though. In the currency market, the Japanese yen that stood particular out. USDJPY has risen 1.3 percent from yesterday morning. Comments from Japan Deputy Governor increased expectations for a more stimulating monetary policy according to Reuters. But the increase could also be a result of more risktaking. That is also in line with the rise in long government bond yields. Also the Nikkei 225 rose to its highest level since 2010. Good profit reports contributed to this increase. In the currency market EURUSD rose 0.3 percent since yesterday morning. The Euro trades this morning around 1.362 EURUSD. British pound remained stable against the euro, while the Swedish krona weakened slightly. Also the Norwegian krone fell slightly against the euro and trades this morning around 7.46. On the other hand, the import-weighted index, I-44, strengthened a bit since yesterday morning. Several countries released consumptions figures yesterday. In Norway retail sales (volume), excluding sales of motor vehicles, rose 0.2 per cent from November to December, after an increase of 0.3 per cent the month before (revised up from +0.2). According to Bloomberg, it was expected an increase of 0.1 per cent in December, while a Reuters poll showed expectations of -0.2 per cent. The consumption of goods, which includes car sales and consumption of electricity and fuel, rose 0.1 per cent in December, after a decrease of 0.1 per cent the month before (revised down from +0.1). After a strong performance in retail and consumer goods in the first half of last year, the trend reversed after the summer and consumption has been more or less flat in the second half of last year. The underlying drivers remain solid, with solid growth in real incomes, low unemployment, low interest rates and high consumer confidence, but consumers still seem to be reluctant to boost consumption. Norges Bank has estimated a consumption growth this year of 4 percent. There must be a significant boost early in the year to reach that estimate. We expect higher consumption growth in the beginning of 2013, but not as much as needed to reach Norges Banks consumption forecast. The moderate consumption development supports our view that Norges Bank will delay an eventual rise in policy rates. In the U.S., personal income rose by 2.6 percent m/m in December against the expected 0.8 percent, and disposable income rose even more. Dividend payments significantly boosted the numbers. Presumably it was also paid higher bonuses that normally would come early this year. The reason was fear for tax hikes this year. Disposable income ex. dividends increased by 0.5 percent. Private consumption rose by 0.2 percent m/m in December, both in nominal and in real terms as the price deflator was unchanged this month. The savings rate rose from 4.1 percent to 6.5 percent. But next month will probably dividend payments fall and the saving ratio likewise. Also in the U.S. the initial claims after a few weeks of low levels. The four-week average was unchanged. In Germany, retail sales fell 1.7 percent m/m in December, weaker than expected. It is not due to weaker labor market: the number of unemployed fell by 16' last month, versus an expected increase of 8'. The underlying trend in German retail sales are weak and the level is now at 2009 levels. Retail sales figures in Germany are volatile and not always good indicators of private consumption. In France, however, retail sales also fell markedly in December. In Norway the credit growth C2 fell to 6.5 per cent y/y in December, from 7.1 per cent in. Credit to households increased 7.2 per cent y/y in December as in November. A base effect pulled nonfinancial corporates credit growth down. Also municipalities contributed to lower the overall credit growth. Norges Bank said yesterday it will purchase FX for 300 mill. NOK per day in February, as in January and in line with our forecast. If the revenues from the petroleum sector and the non-oil budget deficit stay as projected, we expect NOK 300 million to be bought every day for the rest of the year. Norges Bank prefers, through the active use of the petrobufferportifolio, to keep the purchases evenly distributed through the year, thereby limiting the market impact. kyrre.aamdal@dnb.no Yesterdays key economic events (GMT) 09:00 Norway C2 Credit growth 09:00 Norway Retail sales 09:00 Norway NBs FX purchase, mill. Todays key economic events (GMT) 09:00 Norway Reg. unemployment 13:30 USA Employment 13:30 USA Unemployment As of Dec Dec Feb As of Jan Jan Jan Unit Y/y % % NOK/D Unit % 1000 % Prior Poll Actual 6.5 0.2 300 2.7 150 7.7

Norsk 10y sov.

2.8 2.6 2.4 2.2 2.0 1.8 04-Jan
rente

18-Jan

100 80 60 40 20 0 01-Feb
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

7.1 7.0 0.2 -0.2 300 Prior Poll DNB 2.4 155 7.8 2.7 165 7.8

Morning Report
01.02.2013

3m LIBOR
0.20 0.15 0.10 0.05 0.00 04-Jan
EUR

18-Jan

0.31 0.31 0.30 0.30 0.29 01-Feb

USD(rha)

NOK & 3m NIBOR 7.60 1.90 7.50 1.85 7.40 1.80 7.30 7.20 1.75 04-Jan 18-Jan 01-Feb
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 90.98 1.3580 0.8586 7.4610 8.6141 1.2347 7.4351 5.4746 6.02 86.41 99.68 8.663 6.023

Today 92.18 1.3620 0.8582 7.4608 8.6522 1.2391 7.4415 5.4639 5.93 86.07 99.74 8.673 6.009

Spot rates and forecasts In 1m Apr-13 Jul-13 Jan-14 FX 0700 1.3 88 90 91 93 AUD 0.3 1.33 1.32 1.36 1.37 CAD 0.0 0.82 0.81 0.85 0.86 CHF 0.0 7.45 7.45 7.45 7.45 CZK 0.4 8.65 8.65 8.60 8.70 RUB 0.4 1.20 1.20 1.20 1.20 GBP 0.1 7.30 7.25 7.25 7.40 HKD -0.2 5.49 5.49 5.33 5.40 KWD -1.5 6.24 6.10 5.86 5.81 LTL -0.4 84.4 83.8 84.3 85.1 LVL 0.1 98.0 97.3 97.3 99.3 NZD 0.1 8.90 8.95 8.53 8.60 SEK -0.2 608.33 604.17 604.17 592.00 SGD

USD NOK 1.040 5.681 0.998 5.475 0.910 600.513 18.873 28.946 29.998 18.212 1.587 8.670 7.757 0.704 0.281 19.454 2.535 2.155 0.514 10.637 0.842 4.598 6.350 86.030 1.242 4.397

US dollar

5.7 5.6 5.5 5.4 5.3

04-Jan 18-Jan
USDNOK

1.40 1.35 1.30 1.25 01-Feb

EURUSD(rha)

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

Prior 1.84 1.88 1.99 2.25 2.46 2.81 3.09 3.41

Last 1.83 1.87 2.00 2.24 2.44 2.81 3.07 3.39

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

Prior 1.13 1.18 1.28 1.53 1.53 1.88 2.14 2.40

Interest rates Last USD 1.13 1m 1.18 3m 1.28 6m 1.53 12m 1.52 3y 1.87 5y 2.14 7y 2.40 10y

Prior 0.20 0.30 0.47 0.79 0.56 1.02 1.50 2.06

Last 0.20 0.30 0.47 0.78 0.56 0.99 1.48 2.04

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

Prior 0.06 0.15 0.27 0.50 0.85 1.20 1.52 1.90

Last 0.06 0.15 0.28 0.50 0.85 1.19 1.52 1.91 Last 98.32 1.68 -0.33 10y sw ap 1.75 1.75 2.00

Japanese yen

95.0 90.0
85.0

8.0 7.0
04-Jan
USDJ PY

Norw ay Prior NST475 94.30 10y yld 2.64 - US spread 0.66 3m nibor 1.85 1.85 1.85

80.0
18-Jan

6.0 01-Feb
JPYNOK(rha)

Norw ay Apr-13 Jul-13 Jan-14

Governm ent bonds Last SEK Prior Last US Prior 94.50 10y 112.78 112.78 10y 96.81 2.62 10y yld 1.98 1.98 10y yld 1.98 0.61 - US spread 0.00 -0.02 30y yld 3.18 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 96.59 10y 98.17 2.01 10y yld 1.70 3.19 - US spread -0.28 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 04-Jan 18-Jan

SEKNOK CHFNOK(rha)

6.1 6.0 5.9 5.8 01-Feb

Equities 14200 13700 13200 12700 12200 04-Jan 18-Jan

Dow J.I.

480 470 460 450 440 01-Feb

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 2.47 2.53 6 19.06.2013 0.38 Last 90.49 90.50 1.97 1.99 3 18.09.2013 0.63 Oil price: (Ldn,cl) 1m 1.96 1.72 -24 18.12.2013 0.88 SPOT 116.75 115.83 1.76 1.73 -3 15.05.2015 2.28 Gold price 31.01.2013 PM 2.03 2.00 -3 19.05.2017 4.30 AM: 1677.5 1664.8 2.19 2.17 -2 22.05.2019 6.30 Equities Today 0700 % last 2.61 2.60 -1 24.05.2023 10.31 Dow Jones 13860.58 -0.4% 2.64 2.62 -2 24.05.2023 10.31 Nasdaq C. 3142.13 -0.4% 3 mnd 6 mnd NOK NIDR NIBOR FTSE100 6276.88 -0.7% 1.89 2.02 1m 1.88 1.83 Eurostoxx50 2702.98 -1.1% 1.92 2.08 3m 2.03 1.87 DAX 7776.05 -0.5% 2.02 2.18 6m 2.10 2.00 Nikkei 225 11179.88 0.4% 2.12 2.28 12m 2.28 2.24 OSEBX 465.79 -0.4% Sources to all tables and graphics: Thomson Reuters, Thomson Datastream and DNB Markets

Morning Report
01.02.2013
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