Morning Report

16.04.2013

Commodity prices are falling

NOK & 3m NIBOR 7.60 1.90 7.50 1.85 7.40 1.80 7.30 7.20 1.75 14-Mar 02-Apr 16-Apr
EURNOK 3m (rha)

The prices of several key commodities fell sharply in yesterday's trading. Surprisingly weak macroeconomic data from China and the United States contributed to the drop in prices, which may also be a correction after a prolonged recovery phase. The negative mood in the markets continued yesterday. Stock markets fell in Europe and the U.S. The decline was most pronounced in the U.S., with the Nasdaq and S&P500 both down well over 2%. Oslo Stock Exchange fell 1.5%, weighed down by lower oil prices, and the Asian bourses have fallen this morning. In currency markets, the effects have been muted, but the yen has adjusted slightly weaker against the dollar having appreciated considerably over the weekend. Commodity prices corrected sharply yesterday, burdened by weaker growth prospects in China. Brent blend has declined so far in April and is now trading below 100 USD, the lowest level in nine months. Gold prices fell by more than 100 USD per ounce yesterday and brought the price down to the lowest level in over two years. The decline may have been exacerbated by the fact that many fear a major correction after the prolonged rise in the gold price. The decline also affects other commodities, such as aluminum. In the U.S., the key figures in March surprised on the downside. This looks set to continue in April. The NAHB housing market index, which measures optimism among home builders, fell from 44 in March to 42 in April, while it was expected a rise to 45. Still, the level is significantly higher than a year ago (24), but the upward trend appears to have stalled in recent months. Home builders report continued good momentum in demand for new homes, but have trouble meeting the increased demand as a result of tight credit and rising costs. The Empire State index fell from 9.24 in March to 3.05 in April. This indicates that the development of the manufacturing industry in the New York region improved in April, but that the improvement was less than in March. The index for new orders fell, but remained above zero, while the employment index rose. Today, several important figures (for March) will be released. Core inflation is expected to increase by 0.2% (seasonally adjusted). Residential construction is expected to increase by 0.8% and industrial production is projected to grow by 0.3%. In Sweden, the Government presented the revised budget for the current year yesterday. The cyclicallyadjusted budget balance deteriorated. The surplus of 0.4% for last year is now expected to be turned into a deficit of 0.3% this year. This implies that fiscal policy is expansionary. Nevertheless, the Swedish government debt remains very low by European standards. The debt ratio is expected to increase to 42% of GDP next year, but to decline to only 32% in 2017. The forecasts for GDP-growth this year was only marginally adjusted up to 1.2%, while the growth outlook for next year was revised down sharply from 3.0% to 2.2%. Hence, the prospects for the labor market deteriorate. The Swedish government expects unemployment to rise to 8.4% next year, which will curb inflation ahead. Forecasts indicate that core inflation will remain below 2% until 2017. Data released by Statistics Norway showed that the Norwegian trade surplus was 37.7 billion in March. This was somewhat higher than in February, but almost 9 billion less than in March last year. A sharp decline in oil and gas exports lowered the surplus. Exports excluding oil and gas increased by more than 1% in nominal terms in March and have risen by 4% in the first quarter as a whole. Today Governor Olsen holds a speech for LO Finance (a union). Only the charts are published on the website of the central bank. The balance of trade in the euro zone showed a significantly higher surplus than expected in February, thanks to weak imports (-2%). Exports were virtually unchanged after rising in January. Today the inflation for March in the euro zone is released. In addition, the ZEW index for Germany is due, which is expected to improve slightly. UK inflation is also due this morning. It is expected that inflation will remain stable at 2.8%. Today the IMF publishes Chapters 1 and 2 of the World Economic Outlook with new macro forecasts and Fiscal Monitor with new projections for public finances. It is known that the organization will revise down GDP growth for the U.S. this year to 1.7%. We will not be surprised if the projections for the euro zone are lowered, and the same can be the case for countries such as China and Brazil. knut.magnussen@dnb.no Yesterdays key economic events (GMT)
02:00 12:30 14:00 China USA USA GDP NY Fed Empire State NAHB

Norw ay: 10y Gov't Bond 2.4 100

2.2 2.0
14-Mar
Rate

90
80 02-Apr

70 16-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
Q1 Apr Apr

Unit
y/y % Index Index

Prior
7.9 9.24 44

Poll
8.0 6.00 45

Actual
7.7 3.05 42

Todays key economic events (GMT) 09:00 Germany ZEW 12:30 USA CPI ex food/energy 12:30 USA Housing Starts

As of Apr Mar Mar

Unit Index m/m % mill

Prior 48.5 0.2 0.917

Poll 45.6 0.2 0.924

DNB

Morning Report
16.04.2013

3m LIBOR
0.140 0.135 0.130 0.125 0.120 0.115 14-Mar
EUR

02-Apr

0.29 0.29 0.28 0.28 0.27 16-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 98.02 1.3079 0.8537 7.4561 8.3519 1.2166 7.5056 5.7384 5.86 89.92 100.66 8.793 6.169

Today 97.43 1.3069 0.8548 7.4568 8.3843 1.2155 7.5139 5.7509 5.90 89.69 100.80 8.796 6.185

Spot rates and forecasts In 1m Jul-13 Oct-13 Apr-14 FX 0700 -0.6 95 95 95 100 AUD -0.1 1.30 1.32 1.34 1.37 CAD 0.1 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 -0.1 1.22 1.22 1.25 1.27 GBP 0.1 7.45 7.40 7.40 7.40 HKD 0.2 5.73 5.61 5.52 5.40 KWD 0.8 6.03 5.90 5.81 5.40 LTL -0.3 88.7 88.1 87.6 86.0 LVL 0.1 100.0 99.3 99.3 99.3 NZD 0.0 8.76 8.71 8.60 8.51 SEK 0.3 610.66 606.56 592.00 582.68 SGD

USD NOK 1.036 5.955 1.023 5.618 0.930 618.152 19.798 29.036 31.439 18.285 1.530 8.792 7.762 0.741 0.285 20.180 2.642 2.176 0.536 10.722 0.847 4.872 6.415 89.616 1.237 4.646

14-Mar

02-Apr

98 16-Apr
USD/b (rha)

NOK TWI

US dollar

5.9 5.8 5.7 5.6 14-Mar

1.35 1.30
02-Apr

1.25 16-Apr
EURUSD(rha)

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

Prior 1.79 1.84 1.88 2.05 2.01 2.34 2.68 3.02

Last 1.77 1.84 1.89 2.08 2.02 2.34 2.66 3.02

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

Prior 1.16 1.25 1.33 #N/A 1.46 1.69 1.92 2.17

Interest rates Last USD 1.16 1m 1.25 3m 1.33 6m #N/A 12m 1.46 3y 1.69 5y 1.93 7y 2.17 10y

Prior 0.20 0.28 0.44 0.72 0.46 0.84 1.31 1.88

Last 0.20 0.28 0.44 0.72 0.44 0.83 1.30 1.85

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

Prior 0.06 0.13 0.22 0.42 0.53 0.83 1.16 1.59

Last 0.06 0.13 0.22 0.42 0.51 0.81 1.13 1.55

USDNOK

Japanese yen 105.0 7.0 100.0 95.0 6.0 90.0 85.0 5.0 14-Mar 02-Apr 16-Apr
USDJ PY JPYNOK(rha)

Norw ay Prior NST475 98.46 10y yld 2.17 - US spread 0.45 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 98.50 10y 98.32 98.36 10y 102.47 2.17 10y yld 1.68 1.67 10y yld 1.72 0.47 - US spread -0.05 -0.03 30y yld 2.92 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 102.70 10y 102.19 102.43 1.70 10y yld 1.26 1.24 2.87 - US spread -0.46 -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 14-Mar 02-Apr
SEKNOK

6.3 6.2 6.1 6.0 5.9 16-Apr

CHFNOK (rha)

Equities
15200

14700 14200
13700 14-Mar 02-Apr

490 480 470 460 450 16-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 1.63 1.57 -6 18.09.2013 0.42 Last 92.25 92.15 1.59 1.55 -4 18.12.2013 0.67 Oil price: (Ldn,cl) 1m 1.65 1.64 -1 19.03.2014 0.92 SPOT 98.82 99.58 1.29 1.29 0 15.05.2015 2.08 Gold price 15.04.2013 PM 1.41 1.42 0 19.05.2017 4.09 AM: 1535.5 1395.0 1.62 1.61 -1 22.05.2019 6.10 Equities Today 0700 % last 2.15 2.15 0 24.05.2023 10.11 Dow Jones 14599.20 -1.8% 2.17 2.17 0 24.05.2023 10.11 Nasdaq C. 3216.49 -2.4% 3 mnd 6 mnd NOK NIDR NIBOR FTSE100 6343.60 -0.6% 1.78 1.86 1m 1.82 1.77 Eurostoxx50 2624.71 -0.3% 1.74 1.83 3m 1.90 1.84 DAX 7712.63 -0.4% 1.73 1.83 6m 1.95 1.89 Nikkei 225 13267.54 -0.1% 1.73 1.85 12m 2.08 2.08 OSEBX 463.16 -1.5% Sources to all tables and graphics: Thomson Reuters, Thomson Datastream and DNB Markets

Morning Report
16.04.2013
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