Morning Report

03.07.2013

Riksbank announcement today

NOK & 3m NIBOR
8.10

7.90
7.70

7.50 04-Jun

19-Jun

1.90 1.80 1.70 1.60 1.50 03-Jul

3m (rha)

Today the Riksbank announces its policy rate decision. The recent positive developments in Swedish figures suggest that the central bank will keep interest rates steady. U.S. stock indices ended down yesterday after rising early in the session. Also in Europe there was a rainy day in the stock markets. Eurostoxx50 fell 0.7 per cent, FTSE100 was down 0.1 per cent. The benchmark index of the Oslo Stock Exchange, however, was up 0.6 per cent. In Asia, there was a broad decline in stocks today. In Japan, the Nikkei 225 declined by 0.3 per cent. In Hong Kong, the market is down 1.6 per cent and in Shanghai, share prices fell by 0.8 per cent. The decline in Asia may be related to todays release of PMIs for the Chinese service sector for June. The public PMI fell from 54.3 to 53.9, while the private PMI from HSBC rose from 51.2 to 51.3. The sharp fall in April is therefore not nearly reversed in May and June. In the fixed income market in the U.S. interest rates for some treasury bills turned negative yesterday. Demand for Treasury bills have risen partly to avoid large fluctuations in yields in connection with the Fridays non-farm payrolls, and partly money market funds deploying the cash they have received due to redemption from other areas after quarterend. They will park their cash until markets has been a bit quieter. In the currency markets, USDJPY continued upwards and is noted to 100.7 USDJPY when typing, up 1 per cent since yesterday morning. The dollar also strengthened against the euro and the EURUSD is down 0.7 per cent over the last 24 hours. Norwegian Kroner have remained stable against the dollar and thus strengthened 0.7 per cent against the Euro. Swedish krona, however, has fallen 0.2 per cent against the Euro and thus weakened against the Norwegian Kroner. In the oil market turmoil in Egypt has pushed up prices. Prices of Brent rose two Dollars since yesterday afternoon. In the U.S., total industrial orders rose by 2.1 per cent from April to May. The month before, growth was 1.3 per cent. Order levels are still lower than in February after orders fell sharply in March. There was little reaction to the figures. More interesting were the car sales figures. In June, total U.S. cars sales rose by 4.2 per cent from May. June sales were the highest since November 2007. Purchases of cars confirm that households are more optimistic. It also shows that U.S. automakers increased activity as the import of cars has been flat. Yesterday, the Swedish Riksbank held its monetary policy meeting. The interest rate decision and the interest rate path will be published today at. 7:30 GMT. Last time, in April, the central bank kept policy rate unchanged at 1.00 percent, but the interest rate path was lowered significantly. The new path implied unchanged policy rate until the fourth quarter of 2014. Also, the policy rate was just below 1.00 per cent most of the time until Q4 2014, which is an indication that there is a greater chance of a rate cut than for an increase. There were two main reasons why the interest rate path was lowered. The first was a desire to support the economic recovery. Riksbank expected an upswing, but considered it to be vulnerable and believed that by keeping interest rates low for longer the recovery would eventually get better grip. The second reason was a new assessment of the inflation outlook, with inflation impulses were considered weaker than before. Inflation was now considered to be below the target of 2 per cent until early 2015, even with a lower interest rate path. As in Norway, the Riksbank is worried about high debt for households and further debt growth, and housing markets prices have again begun to rise. This has been the major obstacle to cut interest rates further. Since the monetary policy meeting in April, the key figures for a large part have pointed in the right direction for Sweden. The seasonally adjusted unemployment rate has declined slightly and employment growth has accelerated. The figures are volatile, but the underlying trend indicate improved labour market. Manufacturing PMI has come up well, especially after Monday's positive number. Todays PMI for the services sector, however, was disappointing with a decline to 44.8 versus expectations of 48.7. Retail sales have been rising, albeit at a moderate pace. New car registration has declined, but in recent months, it appears that the decline is about to come to a halt. The inflation picture is important for monetary policy. In early May, the inflation figures for April showed a much lower inflation rate than the central bank had projected. This increased chances of rate cut in July. In May, however, inflation picked up and was close to the Riksbank's forecast. Before this meeting only one of nineteen surveyed analysts expect rate cut, the other waiting an unchanged rate. This is also our estimate. We also believe that the rate path will be more or less unchanged. kyrre.aamdal@dnb.no Yesterdays key economic events (GMT) 09:00 EZ PPI 14:00 USA Dur. Orders ex Transport 14:00 USA Industrial Orders Todays key economic events (GMT) 07:30 Sweden Riksbank MP Meeting 07:58 EMU PMI, tservices 14:00 USA ISM, services As of May May May As of Jun Jun Unit m/m % m/m % % Unit % index index Prior -0.6 0.7 1.0 Prior 1.00 48.6 53.7 Poll -0.2 2.0 Poll 1.00 48.6 54.0 Actual -0.3 0.6 2.1 DNB 1.00

EURNOK

Norw ay: 10y Gov't Bond

2.8 2.6 2.4 2.2 2.0 04-Jun
Rate

95

85
75 19-Jun

65 03-Jul
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 64 76 30 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

Morning Report
03.07.2013

3m LIBOR
0.200 0.150 0.100 0.050 0.000 04-Jun
EUR

19-Jun

0.28 0.28 0.27 0.27 0.27 0.27 03-Jul

USD (rha)

Oil price & NOK TWI

98 96 94 92 90 110

105
100

04-Jun

19-Jun

95 03-Jul
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 99.72 1.3059 0.8592 7.4592 8.7214 1.2355 7.9860 6.1163 6.13 91.63 107.07 9.295 6.464

Today 100.82 1.2971 0.8563 7.4602 8.7397 1.2339 7.9310 6.1150 6.07 90.74 106.44 9.268 6.430

Spot rates and forecasts In 1m Sep-13 Dec-13 Jun-14 FX 0700 1.1 98 102 107 110 AUD -0.7 1.30 1.26 1.30 1.32 CAD -0.3 0.85 0.85 0.86 0.87 CHF 0.0 7.45 7.45 7.45 7.45 CZK 0.2 8.55 8.45 8.50 8.60 RUB -0.1 1.24 1.25 1.27 1.30 GBP -0.7 7.65 7.70 7.70 7.70 HKD 0.0 5.88 6.11 5.92 5.83 KWD -1.1 6.00 5.99 5.54 5.30 LTL -1.0 89.5 91.1 90.6 89.5 LVL -0.6 102.7 103.4 103.4 103.4 NZD -0.3 9.00 9.06 8.95 8.85 SEK -0.5 616.94 616.00 606.30 592.31 SGD

USD NOK 0.907 5.542 1.055 5.792 0.951 642.555 20.102 30.406 33.229 18.394 1.515 9.261 7.755 0.788 0.286 21.375 2.662 2.296 0.541 11.294 0.772 4.718 6.736 90.746 1.275 4.795

NOK TWI

US dollar 6.2 6.0 5.8 5.6 5.4

04-Jun 19-Jun
USDNOK

1.35 1.33 1.31 1.29 1.27 1.25 03-Jul

EURUSD(rha)

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

Prior 1.54 1.67 1.75 1.90 2.18 2.61 2.94 3.25

Last 1.56 1.65 1.74 1.88 2.17 2.60 2.93 3.25

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

Prior 1.13 1.21 1.28 1.75 2.17 2.45 2.68

Interest rates Last USD 1.13 1m 1.21 3m 1.28 6m #N/A 12m 1.75 3y 2.17 5y 2.45 7y 2.68 10y

Prior 0.20 0.27 0.41 0.69 0.80 1.54 2.13 2.68

Last 0.20 0.27 0.41 0.69 0.80 1.52 2.10 2.67

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

Prior 0.07 0.15 0.26 0.47 0.79 1.23 1.59 2.00

Last 0.07 0.15 0.26 0.47 0.76 1.19 1.56 1.98 Last 98.45 1.67 -0.79 10y sw ap 1.75 1.75 2.00

102.0 100.0 98.0 96.0 94.0 92.0 90.0

Japanese yen

04-Jun
USDJ PY

19-Jun

7.0 6.5 6.0 5.5 5.0 03-Jul

Norw ay Prior NST475 95.35 10y yld 2.54 - US spread 0.06 3m nibor 1.55 1.55 1.55

Norw ay Sep-13 Dec-13 Jun-14

Governm ent bonds Last SEK Prior Last US Prior 95.43 10y 93.65 93.54 10y 93.67 2.53 10y yld 2.19 2.21 10y yld 2.47 0.06 - US spread -0.28 -0.26 30y yld 3.47 Interest rate forecasts 10y 10y Sw eden 3m libor USA 3m libor sw ap sw ap 3.00 3.00 3.25 Sep-13 Dec-13 Jun-14 1.25 1.25 1.25 2.25 2.25 2.50 Sep-13 Dec-13 Jun-14 0.30 0.35 0.35

Last Germany Prior 93.75 10y 97.99 2.47 10y yld 1.72 3.47 - US spread -0.75 10y sw ap 2.25 2.25 2.50 3m euribor 0.20 0.25 0.20

Germany Sep-13 Dec-13 Jun-14

JPYNOK(rha)

SEKNOK & CHFNOK

92 91 90 89 88 87 6.6

6.4
6.2

04-Jun

19-Jun

6.0 03-Jul
CHFNOK (rha)

SEKNOK

NOK sov. NST21 NST22 NST23 NST471 NST472 NST475

Prior 1.46 1.47 1.57 1.44 1.70 2.52

Equities 15700 15200 14700 14200 13700 04-Jun 19-Jun

Dow Jones

500

480 460
440 03-Jul
Os lo (rha)

NOK FRA SEP DEC MAR JUN

3 mnd 1.69 1.70 1.74 1.83 Sources

NOK-index TWI Prior Last 96.30 96.94 Oil price: (Ldn,cl) 1m SPOT 106.22 104.91 Gold price 02.07.2013 PM AM: 1242.8 1252.5 Equities Today 0700 % last Dow Jones 14932.41 -0.3% Nasdaq C. 3433.40 0.0% 6 mnd NOK NIDR NIBOR FTSE100 6303.94 -0.1% 1.80 1m 1.75 1.56 Eurostoxx50 2603.20 -0.7% 1.83 3m 1.82 1.65 DAX 7910.77 -0.9% 1.89 6m 1.87 1.74 Nikkei 225 14055.56 -0.3% 1.98 12m 2.00 1.88 OSEBX 476.86 0.6% to all tables and graphics: Thomson Reuters, Thomson Datastream and DNB Markets

Last Change 1.47 1 1.47 1 1.57 0 1.44 0 1.70 0 2.51 -2

Miscellaneous Maturity year rem. 18.12.2013 0.46 19.03.2014 0.71 18.06.2014 0.96 15.05.2015 1.87 19.05.2017 3.88 24.05.2023 9.90

Morning Report
03.07.2013
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Morning Report
03.07.2013

3m LIBOR
0.200 0.150 0.100 0.050 0.000 04-Jun
EUR

19-Jun

0.28 0.28 0.27 0.27 0.27 0.27 03-Jul

USD (rha)

Oil price & NOK TWI

98 96 94 92 90 110

105
100

04-Jun

19-Jun

95 03-Jul
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 99.72 1.3059 0.8592 7.4592 8.7214 1.2355 7.9860 6.1163 6.13 91.63 107.07 9.295 6.464

Today 100.82 1.2971 0.8563 7.4602 8.7397 1.2339 7.9310 6.1150 6.07 90.74 106.44 9.268 6.430

Spot rates and forecasts In 1m Sep-13 Dec-13 Jun-14 FX 0700 1.1 98 102 107 110 AUD -0.7 1.30 1.26 1.30 1.32 CAD -0.3 0.85 0.85 0.86 0.87 CHF 0.0 7.45 7.45 7.45 7.45 CZK 0.2 8.55 8.45 8.50 8.60 RUB -0.1 1.24 1.25 1.27 1.30 GBP -0.7 7.65 7.70 7.70 7.70 HKD 0.0 5.88 6.11 5.92 5.83 KWD -1.1 6.00 5.99 5.54 5.30 LTL -1.0 89.5 91.1 90.6 89.5 LVL -0.6 102.7 103.4 103.4 103.4 NZD -0.3 9.00 9.06 8.95 8.85 SEK -0.5 616.94 616.00 606.30 592.31 SGD

USD NOK 0.907 5.542 1.055 5.792 0.951 642.555 20.102 30.406 33.229 18.394 1.515 9.261 7.755 0.788 0.286 21.375 2.662 2.296 0.541 11.294 0.772 4.718 6.736 90.746 1.275 4.795

NOK TWI

US dollar 6.2 6.0 5.8 5.6 5.4

04-Jun 19-Jun
USDNOK

1.35 1.33 1.31 1.29 1.27 1.25 03-Jul

EURUSD(rha)

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

Prior 1.54 1.67 1.75 1.90 2.18 2.61 2.94 3.25

Last 1.56 1.65 1.74 1.88 2.17 2.60 2.93 3.25

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

Prior 1.13 1.21 1.28 1.75 2.17 2.45 2.68

Interest rates Last USD 1.13 1m 1.21 3m 1.28 6m #N/A 12m 1.75 3y 2.17 5y 2.45 7y 2.68 10y

Prior 0.20 0.27 0.41 0.69 0.80 1.54 2.13 2.68

Last 0.20 0.27 0.41 0.69 0.80 1.52 2.10 2.67

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

Prior 0.07 0.15 0.26 0.47 0.79 1.23 1.59 2.00

Last 0.07 0.15 0.26 0.47 0.76 1.19 1.56 1.98 Last 98.45 1.67 -0.79 10y sw ap 1.75 1.75 2.00

102.0 100.0 98.0 96.0 94.0 92.0 90.0

Japanese yen

04-Jun
USDJ PY

19-Jun

7.0 6.5 6.0 5.5 5.0 03-Jul

Norw ay Prior NST475 95.35 10y yld 2.54 - US spread 0.06 3m nibor 1.55 1.55 1.55

Norw ay Sep-13 Dec-13 Jun-14

Governm ent bonds Last SEK Prior Last US Prior 95.43 10y 93.65 93.54 10y 93.67 2.53 10y yld 2.19 2.21 10y yld 2.47 0.06 - US spread -0.28 -0.26 30y yld 3.47 Interest rate forecasts 10y 10y Sw eden 3m libor USA 3m libor sw ap sw ap 3.00 3.00 3.25 Sep-13 Dec-13 Jun-14 1.25 1.25 1.25 2.25 2.25 2.50 Sep-13 Dec-13 Jun-14 0.30 0.35 0.35

Last Germany Prior 93.75 10y 97.99 2.47 10y yld 1.72 3.47 - US spread -0.75 10y sw ap 2.25 2.25 2.50 3m euribor 0.20 0.25 0.20

Germany Sep-13 Dec-13 Jun-14

JPYNOK(rha)

SEKNOK & CHFNOK

92 91 90 89 88 87 6.6

6.4
6.2

04-Jun

19-Jun

6.0 03-Jul
CHFNOK (rha)

SEKNOK

NOK sov. NST21 NST22 NST23 NST471 NST472 NST475

Prior 1.46 1.47 1.57 1.44 1.70 2.52

Equities 15700 15200 14700 14200 13700 04-Jun 19-Jun

Dow Jones

500

480 460
440 03-Jul
Os lo (rha)

NOK FRA SEP DEC MAR JUN

3 mnd 1.69 1.70 1.74 1.83 Sources

NOK-index TWI Prior Last 96.30 96.94 Oil price: (Ldn,cl) 1m SPOT 106.22 104.91 Gold price 02.07.2013 PM AM: 1242.8 1252.5 Equities Today 0700 % last Dow Jones 14932.41 -0.3% Nasdaq C. 3433.40 0.0% 6 mnd NOK NIDR NIBOR FTSE100 6303.94 -0.1% 1.80 1m 1.75 1.56 Eurostoxx50 2603.20 -0.7% 1.83 3m 1.82 1.65 DAX 7910.77 -0.9% 1.89 6m 1.87 1.74 Nikkei 225 14055.56 -0.3% 1.98 12m 2.00 1.88 OSEBX 476.86 0.6% to all tables and graphics: Thomson Reuters, Thomson Datastream and DNB Markets

Last Change 1.47 1 1.47 1 1.57 0 1.44 0 1.70 0 2.51 -2

Miscellaneous Maturity year rem. 18.12.2013 0.46 19.03.2014 0.71 18.06.2014 0.96 15.05.2015 1.87 19.05.2017 3.88 24.05.2023 9.90