Morning Report

15.04.2013

Slower growth in China

NOK & 3m NIBOR 7.60 1.90 7.50 1.85 7.40 1.80 7.30 7.20 1.75 13-Mar 27-Mar 15-Apr
EURNOK 3m (rha)

GDP growth in China fell to 7.7% in the first quarter. This was weaker than expected. The US figures on Friday were also disappointing. The markets reacted with a marked appreciation of the yen over the weekend. Not surprisingly the markets reacted negatively to the disappointing macroeconomic news from China and the U.S. Equity markets ended with a decline both in Europe and in the U.S. on Friday, while the Asian markets have fallen today. In the currency market, the yen strengthened markedly against both the euro and the dollar through the weekend and USDJPY was traded down to 97.50 at the lowest. The appreciation of the yen could also be related to the report from U.S. Treasury on Friday which stated that the development of the yen will be monitored closely. The long rates fell by around 5 basis points in the U.S. and in Germany on Friday, while the Spanish rates climbed slightly. As expected, the euro zone finance ministers (The Eurogroup) on Friday's meeting (which took place in Dublin) extended the duration of the emergency loans to Ireland and Portugal with seven years. China's annual GDP-growth slowed from 7.9% in the fourth quarter to 7.7% in the first. A decline to 8.0% was expected. The quarterly increase was 1.6%. The decline was somewhat surprising in light of the relatively strong figures for the first two months of the year. In a commentary the new Prime Minister Li characterized the outlook as murky. The Chinese slowdown is, however, well in line with the signals the government has previously given, and moreover also in line with our own estimates. We expect GDP-growth this year to slow to 7.5%. There were also released several other Chinese figures, which underpins the somewhat weaker GDP figures. The annual growth in retail sales rose albeit slightly more than expected to 12.6% in March. Industrial production growth was, however, slowed to 8.9% in March, one percentage point less than in February. Urban investments disappointed slightly, but growth is still high 20.9% (per annum). American retail sales for March showed a somewhat surprising decline of 0.4%. It was expected that sales would remain unchanged. Excluding auto sales and building materials the drop was a more moderate 0.2%. Although the figure joins the row of disappointing figures lately, private consumption will end up with solid growth in the first quarter. The trend in total consumer spending in January and February were surprisingly strong, particularly in light of the increased payroll tax and an increase in petrol prices. Even if we add a small drop in March, private consumption (real) still grow by 3% from the fourth quarter to the first quarter. GDP growth in the first quarter will probably end up over 3%. Consumer confidence remains weak and appears to decrease further. The Michigan index fell from 78.6 in March to 72.3 in April. The decline was about the same for the expectations index, which normally has the highest correlation with the actual consumption. Low confidence suggests that the weak trend in consumption may continue into the second quarter. On the other hand, confidence has not been a good indicator of actual spending recently. In addition, gasoline prices are on the way down, which normally lifts the mood of the consumers. Today, the housing market index from the NAHB for April is due. A rise from 44 to 45 is expected. However, the index has disappointed a bit in recent months. The index was up to 47 in December and January, but fell slightly in February and March. In addition the Empire State index and the TICS figures for capital inflows to the United States are released this afternoon. In the euro zone industrial production surprised on the upside rising with 0.4% in February. It was expected that production would rise by only 0.1%. The increase did not reverse the drop in January, which was revised down to -0.6%. Thus, the underlying trend remains weak. Production rose by almost 1% in Germany and France, but fell by 0.8% in Italy and 1.3% in Spain. There are no important macroeconomic figures from Europe out today. This week the IMF publishes its half-yearly reports. Tomorrow, the World Economic Outlook (with new macro forecasts) and Fiscal Monitor (with projections for public debt) are due, while the Global Financial Stability Report is released Wednesday. It is reported that the IMF will lower GDP projection for the U.S. from 2.0% to 1.7% for 2013. Riksbanken holds its monetary policy meeting on Wednesday (no interest rate change expected), while there are few important figures on the agenda this week. From U.S. several indicators of housing market and inflation figures for March are of most importance. knut.magnussen@dnb.no Yesterdays key economic events (GMT)
09:00 12:30 13:55 02:00 12:30 14:00 EMU US US China USA USA Industrial production Retail sales ex autos Michigan sentiment prelim. GDP NY Fed Empire State NAHB

Norw ay: 10y Gov't Bond 2.4 100

2.2 2.0
13-Mar
Rate

90
80 27-Mar

70 15-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 Mar Apr

Unit
m/m% m/m% Index

Prior
-0.4 1.0 78.6

Poll
0.1 0.0 78.6

Actual
0.4 -0.4 72.3

Todays key economic events (GMT)

As of
Q1 Apr Apr

Unit
y/y % Index Index

Prior
7.9 9.24 44

Poll
8.0 6.00 45

DNB
7.7

Morning Report
15.04.2013

3m LIBOR
0.140 0.135 0.130 0.125 0.120 0.115 13-Mar
EUR

27-Mar

0.29 0.29 0.28 0.28 0.27 15-Apr

USD (rha)

Oil price & NOK TWI

94 93 92 91 90 113

108
103

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 99.45 1.3114 0.8519 7.4562 8.3205 1.2191 7.4830 5.7040 5.74 89.93 100.35 8.782 6.139

Today 98.05 1.3084 0.8533 7.4565 8.3545 1.2170 7.5012 5.7330 5.85 89.84 100.62 8.794 6.167

Spot rates and forecasts In 1m Jul-13 Oct-13 Apr-14 FX 0700 -1.4 95 95 95 100 AUD -0.2 1.30 1.32 1.34 1.37 CAD 0.2 0.85 0.85 0.86 0.87 CHF 0.0 7.45 7.45 7.45 7.45 CZK 0.4 8.40 8.40 8.45 8.60 RUB -0.2 1.22 1.22 1.25 1.27 GBP 0.2 7.45 7.40 7.40 7.40 HKD 0.5 5.73 5.61 5.52 5.40 KWD 2.0 6.03 5.90 5.81 5.40 LTL -0.1 88.7 88.1 87.6 86.0 LVL 0.3 100.0 99.3 99.3 99.3 NZD 0.1 8.76 8.71 8.60 8.51 SEK 0.5 610.66 606.56 592.00 582.68 SGD

USD NOK 1.044 5.984 1.019 5.626 0.930 616.325 19.780 28.979 31.258 18.338 1.534 8.790 7.762 0.738 0.285 20.112 2.638 2.173 0.536 10.701 0.850 4.874 6.385 89.775 1.236 4.636

13-Mar

27-Mar

98 15-Apr
USD/b (rha)

NOK TWI

US dollar

5.9 5.8 5.7 5.6 13-Mar

1.35 1.30
27-Mar

1.25 15-Apr
EURUSD(rha)

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

Prior 1.79 1.85 1.88 2.06 2.02 2.34 2.66 3.03

Last 1.79 1.84 1.88 2.05 2.01 2.34 2.68 3.02

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

Prior 1.16 1.25 1.33 #N/A 1.49 1.71 1.94 2.18

Interest rates Last USD 1.16 1m 1.25 3m 1.33 6m #N/A 12m 1.49 3y 1.71 5y 1.94 7y 2.18 10y

Prior 0.20 0.28 0.44 0.72 0.47 0.88 1.37 1.93

Last 0.20 0.28 0.44 0.72 0.46 0.84 1.31 1.88

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

Prior 0.06 0.13 0.22 0.42 0.55 0.86 1.20 1.62

Last 0.06 0.13 0.22 0.42 0.53 0.83 1.16 1.59

USDNOK

Japanese yen 105.0 7.0 100.0 95.0 6.0 90.0 85.0 5.0 13-Mar 27-Mar 15-Apr
USDJ PY JPYNOK(rha)

Norw ay Prior NST475 98.40 10y yld 2.18 - US spread 0.39 3m nibor 1.85 1.85 1.85

Norw ay Jul-13 Oct-13 Apr-14

Governm ent bonds Last SEK Prior Last US Prior 98.46 10y 98.23 98.12 10y 101.89 2.17 10y yld 1.68 1.70 10y yld 1.79 0.44 - US spread -0.10 -0.04 30y yld 2.99 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 102.38 10y 101.73 102.09 1.73 10y yld 1.31 1.27 2.94 - US spread -0.48 -0.46 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 13-Mar 27-Mar
SEKNOK

6.3 6.2 6.1 6.0 5.9 15-Apr

CHFNOK (rha)

Equities
15200

14700 14200
13700 13-Mar 27-Mar

490 480 470 460 450 15-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 1.62 1.63 1 18.09.2013 0.43 Last 92.12 91.83 1.59 1.59 1 18.12.2013 0.68 Oil price: (Ldn,cl) 1m 1.65 1.65 1 19.03.2014 0.93 SPOT 100.00 101.55 1.31 1.29 -2 15.05.2015 2.08 Gold price 12.04.2013 PM 1.44 1.41 -2 19.05.2017 4.10 AM: 1565.0 1535.5 1.63 1.62 -1 22.05.2019 6.10 Equities Today 0700 % last 2.16 2.15 -1 24.05.2023 10.11 Dow Jones 14865.06 0.0% 2.18 2.17 -1 24.05.2023 10.11 Nasdaq C. 3294.95 -0.2% 3 mnd 6 mnd NOK NIDR NIBOR FTSE100 6384.39 -0.5% 1.79 1.88 1m 1.82 1.79 Eurostoxx50 2633.47 -1.5% 1.74 1.84 3m 1.90 1.84 DAX 7744.77 -1.6% 1.73 1.84 6m 1.95 1.88 Nikkei 225 13275.66 -1.6% 1.75 1.87 12m 2.08 2.05 OSEBX 470.25 0.1% Sources to all tables and graphics: Thomson Reuters, Thomson Datastream and DNB Markets

Morning Report
15.04.2013
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