Morning Report

09.04.2013

USDJPY approaching 100

NOK & 3m NIBOR 7.60 1.90 7.50 1.85 7.40 1.80 7.30 7.20 1.75 07-Mar 21-Mar 09-Apr
EURNOK 3m (rha)

BoJs plan of massive purchases of Japanese government debt may have spurred higher demand for European debt with higher yields. Yesterday Bank of Japan initiated the plan adopted at the monetary policy meeting on Thursday. It announced purchases amounting to 1 trillion yen of government bonds with maturities between 5 and 10 years, and 200 billion yen of bonds with maturities exceeding 10 years. The yen has weakened further since yesterday morning. USDJPY reached up to 99.6 around midnight, and currently trades at 99.0. The levels are the highest since May 2009. It has been almost exactly four years since we last saw 100. A hot market topic currently is that Japanese investors in search of yield may be entering European bond markets. The French 10-year bond yield has fallen by 25 basis points (to 1.75 percent) since the BoJ meeting, the Italian and Belgian by nearly 20 bp (to 4.4 and 2.0 percent respectively), the Austrian by 16 bp (to 1.52 percent). Market sentiment generally improved somewhat yesterday. Stock markets rose, and continue to rise in Asia today. The US reporting season has started. After closing yesterday aluminum producer Alcoa was the first company out, with results exceeding expectations. Long-term yields on government bonds in "safe havens" have edged up since yesterday morning. The euro has strengthened somewhat, especially against the British pound, and is noted to 1.30 against the dollar. The Swedish krone has appreciated on a broad basis, and by 0.7 percent against the Norwegian krone. In China, inflation slowed more than expected in March. The growth was down 1.1 percentage points from February to 2.1 percent y/y. This was mainly due to a decline in food price inflation, where annual growth declined from 6.0 percent in February to 2.7 percent in March. The large fluctuations are caused by the New Year celebrations. The fall in producer prices accelerated in March, to -1.9 percent y/y. Low inflation is good news for the government, which wants to maintain its expansionary monetary policy to support the economy. Tomorrow Chinese trade figures for March are released. Export growth is expected to have declined from 21.8 percent y/y in February to 10.5 percent in March. In Norway industrial production growth remains solid. In February, growth came to healthy 0.9 percent, and the sharp divergence within the sector is increasing. For capital goods related to the oil sector (i.e. shipyards that build ships and oil platforms, machinery industry), growth is strong. The traditional export industry (i.e. paper, paper products and metals) struggles, with low demand and large inventories abroad. Weak German figures: German industrial production more than lived up to expectations with a growth of 0.5 percent in February. But the January figure was revised down, now showing a decline of 0.6 percent. In sum production has declined in the first two months of 2013. Compared to February 2012 the level was 1.8 percent lower. Non-durable consumer goods fell the most, by 3.5 percent, possibly reflecting a weak trend in consumption. This morning, German foreign trade statistics were released. These were a disappointment. Export fell by 1.5 percent m/m in February, more than reversing the increase of 1.3 percent in January. Imports fell even more, by 3.8 percent m/m, more than reversing the increase in January (3.3 percent). Both foreign and domestic demand has faded. The UK housing market is improving. House prices are rising, albeit cautiously, and according to the March RICS survey only 1 percent more British appraisers expected lower than higher prices in April. In February survey this proportion was 7 percent. Other key figures and events of today: UK industrial output is expected to show a slight increase (0.3 percent) after a decline in January. The Swedish Central Bank Governor Ingves meets in the Financial Committee for a hearing. IMF launches the analytical chapters belonging to next week's World Economic Outlook report. Governor ystein Olsen speaks about "Monetary Policy and Wealth Management in a Small Petroleum Economy" at the Harvard Kennedy School. From the US we get news about the sentiment among small businesses (NFIB). These, which normally accounts for the bulk of employment growth, have been considerably more pessimistic than the large enterprises in the aftermath of the financial crisis. kjersti.haugland@dnb.no Yesterdays key economic events (GMT)
09:00 11:00 01:30 08:30 11:30 16:00 Norway Germany China UK USA Norway Manufacturing prod. Goods prod., prelim CPI Manufacturing production NFIB Governor Olsen speech

Norw ay: 10y Gov't Bond 2.5 100

2.3 2.1
07-Mar
Rate

90
80 21-Mar

70 09-Apr
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 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 24 16 91 23

As of
Feb Feb Mar

Unit
m/m % m/m % y/y %

Prior
0.3 -0.6r 3.2

Poll
0.0 0.3 2.4

Actual
0.9 0.5 2.1

Todays key economic events (GMT)

As of
Feb Mar

Unit
m/m % index

Prior
-1.5 90.8

Poll
0.3

DNB

Morning Report
09.04.2013

3m LIBOR
0.140 0.135 0.130 0.125 0.120 0.115 07-Mar
EUR

21-Mar

0.29 0.28 0.28 0.28 0.28 0.28 09-Apr

USD (rha)

Oil price & NOK TWI

94 93 92 91 90 113 111 109 107 105 09-Apr
USD/b (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 98.59 1.2992 0.8474 7.4546 8.3814 1.2149 7.4470 5.7322 5.82 88.93 99.91 8.790 6.133

Today 99.00 1.3028 0.8538 7.4554 8.3600 1.2180 7.4828 5.7429 5.80 89.58 100.39 8.766 6.145

Spot rates and forecasts In 1m Jul-13 Oct-13 Apr-14 FX 0700 0.4 95 95 95 100 AUD 0.3 1.30 1.32 1.34 1.37 CAD 0.8 0.85 0.85 0.86 0.87 CHF 0.0 7.45 7.45 7.45 7.45 CZK -0.3 8.40 8.40 8.45 8.60 RUB 0.3 1.22 1.22 1.25 1.27 GBP 0.5 7.45 7.40 7.40 7.40 HKD 0.2 5.73 5.61 5.52 5.40 KWD -0.2 6.03 5.90 5.81 5.40 LTL 0.7 88.7 88.1 87.6 86.0 LVL 0.5 100.0 99.3 99.3 99.3 NZD -0.3 8.76 8.71 8.60 8.51 SEK 0.2 610.66 606.56 592.00 582.68 SGD

USD NOK 1.043 5.987 1.017 5.648 0.935 614.221 19.769 29.044 31.197 18.405 1.526 8.763 7.763 0.740 0.285 20.112 2.650 2.166 0.538 10.673 0.849 4.874 6.415 89.504 1.240 4.629

07-Mar

21-Mar

NOK TWI

US dollar

5.9 5.8 5.7 5.6 5.5 07-Mar

1.35 1.30
21-Mar

1.25 09-Apr
EURUSD(rha)

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

Prior 1.85 1.88 1.95 2.14 2.06 2.38 2.68 3.05

Last 1.84 1.87 1.92 2.11 2.06 2.38 2.69 3.05

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

Prior 1.16 1.24 1.32 #N/A 1.51 1.73 1.97 2.24

Interest rates Last USD 1.16 1m 1.24 3m 1.32 6m #N/A 12m 1.50 3y 1.74 5y 1.98 7y 2.23 10y

Prior 0.20 0.28 0.44 0.72 0.47 0.85 1.34 1.91

Last 0.20 0.28 0.44 0.72 0.45 0.84 1.33 1.86

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

Prior 0.06 0.13 0.22 0.42 0.52 0.81 1.14 1.54

Last 0.06 0.13 0.22 0.42 0.54 0.83 1.16 1.58

USDNOK

Japanese yen

100.0 95.0
90.0

7.0 6.0
21-Mar

Norw ay Prior NST475 99.50 10y yld 2.05 - US spread 0.34 3m nibor 1.85 1.85 1.85

85.0 07-Mar
USDJ PY

5.0 09-Apr
JPYNOK(rha)

Norw ay Jul-13 Oct-13 Apr-14

Governm ent bonds Last SEK Prior Last US Prior 99.35 10y 98.43 98.36 10y 102.59 2.07 10y yld 1.66 1.67 10y yld 1.71 0.33 - US spread -0.05 -0.07 30y yld 2.87 Interest rate forecasts 10y 10y Sw eden 3m libor USA 3m libor sw ap sw ap 3.25 3.25 3.50 Jul-13 Oct-13 Apr-14 1.20 1.20 1.20 2.25 2.25 2.50 Jul-13 Oct-13 Apr-14 0.35 0.35 0.35

Last Germany Prior Last 102.34 10y 102.53 102.32 1.74 10y yld 1.23 1.25 2.92 - US spread -0.49 -0.49 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 Jul-13 Oct-13 Apr-14

SEKNOK & CHFNOK 91

90
89

88 07-Mar 21-Mar
SEKNOK

6.3 6.2 6.1 6.0 5.9 09-Apr

CHFNOK (rha)

Equities
15200

14700 14200
13700 07-Mar 21-Mar

490 480 470 460 450 09-Apr

Os lo (rha)

NOK sov. NST20 NST21 NST22 NST471 NST472 NST473 NST475 NST475 NOK FRA JUN SEP DEC MAR

Dow Jones

Miscellaneous Prior Last Change Maturity year rem. NOK-index TWI Prior 1.64 1.65 1 18.09.2013 0.44 Last 91.83 91.48 1.61 1.66 5 18.12.2013 0.69 Oil price: (Ldn,cl) 1m 1.70 1.67 -3 19.03.2014 0.94 SPOT 104.02 105.17 1.21 1.22 1 15.05.2015 2.10 Gold price 08.04.2013 PM 1.29 1.28 -1 19.05.2017 4.11 AM: 1568.0 1575.0 1.51 1.53 2 22.05.2019 6.12 Equities Today 0700 % last 2.03 2.05 2 24.05.2023 10.13 Dow Jones 14613.48 0.3% 2.05 2.07 2 24.05.2023 10.13 Nasdaq C. 3222.25 0.6% 3 mnd 6 mnd NOK NIDR NIBOR FTSE100 6276.94 0.4% 1.82 1.91 1m 1.83 1.84 Eurostoxx50 2589.26 0.2% 1.78 1.89 3m 1.92 1.87 DAX 7662.64 0.1% 1.78 1.90 6m 2.00 1.92 Nikkei 225 13192.35 0.0% 1.80 1.93 12m 2.13 2.11 OSEBX 466.38 0.7% Sources to all tables and graphics: Thomson Reuters, Thomson Datastream and DNB Markets

Morning Report
09.04.2013
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