Morning report

Japan Intervened
31-Oct-2011
Japan intervened in the currency markets and sent the Japanese yen down. Japan sold the yen for the second time in less than three months after it hit another record high against the dollar on Monday. The move took place at 01:25 GMT tonight. The USDJPY immediately increased 3 per cent and is currently up 4.6 per cent from Friday morning. Japan said it intervened to counter speculative moves that were hurting the economy and acted at a unilateral basis. The intervention into currency markets came after weeks of warnings that its patience with the yen's strength was wearing thin, and came just days before the Group of 20 leaders' summit in Cannes, France. Japan seeks to win G20 understanding that a strong yen is one challenge too many for an economy grappling with a nuclear crisis, a USD 250bn rebuilding effort from a March earthquake and tsunami and ballooning public debt. Thursday last week Bank of Japan announced further monetary easing by boosting its government bond purchases and a stronger yen would undermine this stimuli action. The Euro has fallen versus the USD over the weekend and the EURNOK is slightly up. The NOK is currently up 3 per cent versus JPY from Friday morning. In the US personal consumption increased 0.6 per cent on a monthly basis. This was close to expectations. Incomes however increased only by 0.1 per cent, less than expected, and the result was a decline in the saving ratio from 4.1 per cent in August to 3.6 per cent in September. In Sweden September retail sales fell 0.2 per cent from the previous month. This was the third decline in a row. Also consumer confidence fell in October, suggesting further decline in the retail sales. The consumer confidence index has fallen as much as two standard deviations from before summer. Some Norwegian key figures were released Friday. According to NAV, the registered unemployment in Norway decreased by 200 persons (seasonally adjusted) in October. Gross unemployment (incl. persons on labour market measures) also decreased by a good 200 persons. The unadjusted unemployment fell from 2.5 percent in September to 2.4 percent in October. According to Reuters, it was expected to stay unchanged at 2.5 percent. After an increase in unemployment during the summer, the figures for last three months indicate that the situation is about to stabilize. Norges Banks expects the unemployment rate to drop from 2.75 per cent in 2011 to 2.5 per cent in 2012. Fridays figures should not affect the central banks policy assessments significantly. Also on Friday Statistics Norway released its Business Tendency Survey for the third quarter. The main indicator fell from 9 in H1 to 5 in Q3. Still this is far above the level reached in 2009. According to the business tendency survey, the Norwegian manufacturing industry experienced steady growth in total output and a higher level of employment in the third quarter of 2011. A further increase in new orders from domestic markets explains these results. However, there was a modest rise in the number of managers who point to poor demand and fierce competition as factors that limit production. Domestic prices continued to improve, while export prices fell. The size of new orders from export markets was more or less the same as recorded in the previous survey. A monthly consumer confidence indicator showed a substantial decline in October. The main index fell from 8.4 to -1.9. This is the lowest level since March 2009. Both the indicators for personal finances and for the economy fell. A majority expected increased unemployment. The figures are not seasonal adjusted, and have previously declined without a corresponding development in personal consumption. Today Statistics Norway releases retail sales figures for September. We expect a 0.2 per cent decline in the seasonal adjusted volume figure from August to September. According to Bloomberg the consensus forecast is for a 0.2 per cent rise. Retail sales picked up in August after weak July figures. For September shopping centers have reported increased sales, but this may be due to price increased. kyrre.aamdal@dnbnor.no Yesterday's key economic events (GMT) 08:00 Norway Gross unemployment 08:00 Norway Unemployment rate 12:30 US Private consumption Todays key economic events (GMT) 08:00 Norway Norges Banks FX purchases 09:00 Norway Retail sales 10:00 EMU CPI, flash 13:45 USA Chicago PMI As of Oct Oct Sep As of Nov Sep Oct okt Unit 1000 % m/m % Unit Mill. % y/y % index Prior 85.7 2.5 0.2 Prior 550 1.7 3.0 60.4 Actual 85.2 2.4 0.5 0.6 Poll DnB NOR 600 0.2 -0.2 59.2 Poll

NOK & 3m NIB OR

8.00 7.80 7.60 7.40 20-Sep 10-Oct 3m ra. 3.20 3.10 3.00 2.90 28-Oct EURNOK

SEK & 3m STIBOR

9.4 9.3 9.2 9.1 9.0 8.9 20-Sep 10-Oct 3m ra.
Headquarters 0021 Oslo Stranden 21 Offices Abroad New York London Shanghai Singapore Stockholm Sales Oslo (+47) Equity Fixed Income FX/IR Regional sales (+47) Bergen Bod Fredrikstad Hamar Haugesund Lillehammer Kristiansand Oslo Stavanger Troms Trondheim Tnsberg lesund +47 03000

2.55 2.50 2.45 28-Oct EURSEK

+1 212 681 3800 +44 207 6211111 +86 21 6132 2888 +65 6220 6144 +46 8 4734850 22 94 89 40 22 01 78 20 22 01 76 50 55 75 69 61 52 61 38 22 51 77 73 33 73 21 55 39 05 72 27 07 01 84 62 58 37 84 95 87 41 14 09 32 28 76 04 96 74 13 60 80 60 50 69 06 27 62 50 30 80 89 00 09

Research Regional Sales (+47) Eirik Larsen 22 01 76 55 Research FX/IR (+47) ystein Drum Kjersti Haugland Ole Andr Kjennerud Knut A. Magnussen Maren Romstad Camilla Viland Kyrre Aamdal Credit Research (+47) Ole Einar Stokstad Mikael L. Gjerding se Haagensen Rolv Kristian Heitmann Thomas Larsen Knut Olav Rnningen 22 22 22 22 22 22 22 22 22 22 22 22 22 01 01 01 01 01 01 01 01 01 01 01 01 01 76 78 78 76 76 77 76 78 77 76 76 77 78 56 03 24 63 64 41 67 37 62 93 77 36 15

31-Oct-2011

Morning report

Oil spot & N OK TWI

120 115 110 105 100 20-Sep 10-Oct 96 94 28-Oct $/b 100 98

SPOT R ATES AND FORECASTS (Source: Reuters and DnB NOR Markets)
FX USDJPY EURUSD EURGBP EURCHF EURNOK EURSEK EURDKK USDNOK JPYNOK SEKNOK GBPNOK USDSEK JPYSEK NOKSEK GBPSEK Prior 75.85 1.415 0.878 1.221 7.688 9.040 7.444 5.433 7.169 0.852 8.773 6.395 8.437 1.178 10.303 Last 78.70 1.402 0.874 1.221 7.673 9.018 7.442 5.472 6.956 0.851 8.778 6.438 8.176 1.177 10.317 % 3.8% -0.9% -0.4% -0.1% -0.2% -0.2% 0.0% 0.7% -3.0% -0.1% 0.1% 0.7% -3.1% 0.0% 0.1% In 1 m ...3 m 80 80 1.40 1.35 0.88 0.86 1.23 1.23 7.80 7.80 9.20 9.10 7.45 7.45 5.57 5.78 6.96 7.22 0.85 0.86 8.9 9.1 6.57 5.26 1.18 10.45 6.74 5.39 1.17 10.58 ...6 m ...12 m 80 90 1.30 1.25 0.84 0.82 1.23 1.25 7.70 7.70 9.00 9.00 7.45 7.45 5.92 6.16 7.40 6.84 0.86 0.86 9.2 9.4 6.92 5.54 1.17 10.71 7.20 6.48 1.17 10.98 FX AUD CAD CHF CZK DKK GBP HKD ISK KWD LTL LVL NZD PLN SGD RUB USD 1.0568 0.9978 0.8708 17.62 5.3091 1.6042 7.7687 114.13 0.2750 2.4629 0.5026 0.8140 3.0947 1.2481 30.1825 % -1.29% 0.57% 0.86% 0.88% 0.93% -0.50% 0.06% 0.96% 0.31% 0.96% 0.88% -1.27% 0.92% 0.45% 1.52%

NOK TWI ra.

EUR vs GBP & CHF

1.25 1.20 1.15 1.10 20-Sep 10-Oct GBP r.a 0.89 0.88 0.87 0.86 0.85 28-Oct CHF

Gov. Bonds, 10y

2.25 2.00 1.75 1.50 20-Sep 10-Oct NOK, ra. 3.00 2.80 2.60 2.40 2.20 2.00 28-Oct SEK

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

JPY and DowJones

13 12 11 10 20-Sep 10-Oct USDJPY ra. DowJones, 1000 78 77 77 76 28-Oct

10y 10y yield vs bund

SWAP AN D MON EYMARKET RATES (Source: Reuters) N IBOR STIBOR EURIBOR USD LIBOR Prior Last Prior Last Prior Last Prior Last 2.91 2.90 2.33 2.33 1.31 1.31 0.25 0.25 3.13 3.13 2.53 2.54 1.52 1.53 0.43 0.43 3.35 3.34 2.56 2.57 1.73 1.74 0.62 0.62 3.53 3.56 2.61 2.63 1.90 1.90 0.77 0.77 3.20 3.18 2.31 2.26 1.75 1.66 0.79 0.77 3.51 3.49 2.49 2.45 2.11 2.04 1.40 1.37 3.73 3.72 2.66 2.62 2.40 2.36 1.95 1.92 3.96 3.92 2.74 2.70 2.71 2.67 2.44 2.42 GOVERNM ENT BON DS (Source: Reuters) US N ORWAY SWEDEN GERMANY Prior Last Prior Last Prior Last Prior Last 112.4 108.18 113.435 113.44 100.446 101.01 98.265625 98.73 2.75 0.55 2.76 0.63 2.07 2.07 2.20 2.14 -0.12 -0.06 INTEREST RATE FORECASTS SWEDEN GERMANY 3m stibor 10y swap 3m euribor 10y swap 2.50 3.00 1.50 3.00 2.55 3.25 1.50 3.25 2.65 3.25 1.50 3.25 2.32 0.13 US 3m libor 10y 0.45 0.35 0.35 2.28 0.15

USD and gold

2000 1900 1800 1700 1600 1500 20-Sep 10-Oct EURUSD ra. 1.47 1.42 1.37 1.32 28-Oct Gold

In 3m 6m 12m

N ORWAY 3m nibor 10y swap 3.15 4.25 3.15 4.50 3.35 4.50

swap 2.75 3.00 3.25

EU RSEK & OMXS

9.4 9.2 9.0 8.8 20-Sep 500 450 400 350 28-Oct EURSEK

FRA NOK DEC MAR J UN SEP FRA SEK DEC MAR J UN SEP

3m 2.97 2.73 2.61 2.60 3m 2.53 2.21 2.10 2.06

Prior 2.96 2.75 2.64 2.64 Prior 2.54 2.23 2.13 2.10

chg 0.01 -0.02 -0.03 -0.04 chg -0.01 -0.02 -0.03 -0.04

TWI NOK SEK EUR USD GBP Comm. Brent spot Brent 1m Spot gold

Today 95.98 118.90 108.58 76.00 79.50 Today 110.6 109.5 1741.0

% - 0.23 0.08 0.11 1.21 0.13 Last 110.6 109.9 1741.0

Stock ex. Today Dow Jones 12,231.1 Nasdaq 2,737.2 FTSE100 5,702.2 Eurostoxx50 2,462.4 Dax 6,346.2 Nikkei225 8,988.4 Oslo 390.25 Stockholm 467.67 Copenhagen 491.04

% 0.2% -0.1% -0.2% -0.6% 0.1% 0.0% -1.2% -0.1% 0.7%

10-Oct

OMXS ra.

Morning report
31-Oct-2011
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