Morning Report

27.02.2012

No IMF-contribution
NOK & 3m NIBOR 8.00 7.80 7.60 7.40
3m ra.

This weekend's G20 meeting rejected the wishes that the IMF should contribute more to increase the emergency fund in the euro zone. Hence Germany will have to contribute more.
3.20 2.90 2.60 2.30

17-Jan 6-Feb 24-Feb

EURNOK

SEK & 3m STIBOR 9.0 8.9 8.8 8.7 17-Jan 6-Feb

3m ra.

Finance ministers of the G20 countries met this weekend in Mexico. Once again the meeting was dominated by the euro crisis. The most important thing that came out of the meeting was that the IMF will not help to increase the size of the Eurozone's emergency funds. The plan is that the temporary fund (EFSF), with a remaining budget of around 250 billion euro, will continue while the permanent fund (ESM), with a borrowing limit of 500 billion euro, will start from 1 July. Some had hoped that the IMF would be able to contribute to this. According to Reuters, however, the US Treasury Secretary, Geithner, said "There is broad agreement that the IMF cannot substitute for the absence of a stronger European firewall and the IMF cannot move forward without more clarity on Europe's own plans". Hence this increases the pressure on Germany to contribute more. So far Merkel has rejected this. Today the German Bundestag will vote on the proposals for Greek aid package. This is probably just a formality, although some of Merkel's own representatives might vote against the proposal. Later this week, the elected representatives in Finland and the Netherlands will vote on the package. More importantly, however, is that the the Greeks themselves will have to meet all the 38 requirements of the agreement. This must be in place no later than Wednesday if the agreement is to be signed on Thursday. Friday the Norwegian consumer confidence index (ForbrukerMeteret) for February was released. This measurement showed that the mood among Norwegian households are about to pick up. The index rose from 2.3 in January to 4.0 in February. This was the second consecutive month of increase after the index in December was as weak as at the end of 2008. In particular, the outlook for the country's economy improves, and households fear less increase in unemployment. If this trend continues, it may indicate something more momentum in private consumption through 2012. This suggests that Norges Bank will not lower the interest rate further at the next monetary policy meeting. Also, American consumers are in a better mood. The Michigan survey for February was revised higher on Friday, mainlu due higher expectations. The index is now at its highest level in a year, and this despite the rise in petrol prices recently. Sales of new homes in the US fell 0.9% in January, but this was still better than expected. In addition, data for the three previous months were revised up. Thus it seems that this part of the housing market is on track to improve something. Otherwise, new figures confirmed on Friday that both German and British GDP fell by 0.2% in the fourth quarter. In Germany, both consumption and exports contributed negatively, while in Britain it was business investment that pulled GDP down. The information so far in the first quarter indicates that neither of the two economies is still moving into a new recession. The good macroeconomic figures contributed to a positive market closing last week. The euro appreciated markedly against the dollar during the course of Friday and EURUSD traded around 1.3450 on Monday morning. US stock markets improved further and the S&P500 reached the highest level since 2008. The Japanese Nikkei index fell slightly overnight. The NOK remains strong, both against the euro and other currencies. The strong NOK must be viewed in the light of high oil prices, which continue to rise. Brent spot is traded at around 126 dollar a barrel Monday morning. During the week there are many important events and key figures. Most important is probably the second LTRO allocation from the ECB on Wednesday. It is expected that the demand for three-year loans in this round will be 470 billion euro, ie, almost as much as in the first award in December. Wednesday will also keep Ben Bernanke's semi-annual speech to Congress. Thursday the central ISM index of manufacturing in the US is released. From Sweden the GDP for the fourth quarter will be issued on Wednesday. A new report from the Norges Bank's regional network is due the same day. Along with the NAV- unemployment data that follows on Thursday and retail sales on Friday, this will be most important information in advance of monetary policy meeting and the monetary policy report, which is due on 14 March. knut.magnussen@dnb.no Yesterday's key economic events (GMT) 09:30 UK GDP, second estimate 15:00 US New home sales 14:55 US Michigan cons.conf. Todays key economic events (GMT) 14:00 USA Pending home sales As of Q4 Jan Feb As of Jan Unit q/q % Mill Index Unit Index % Prior -0.2 0.307 79.6 Prior -3.5 Poll -0.2 0.315 84.5 Poll 1.0 Actual

2.70 2.60 2.50 2.40 2.30 24-Feb

EURSEK

Headquarters 0021 Oslo Stranden 21

+47 03000

Offices Abroad New York London Shanghai Singapore Stockholm

+1 212 681 3800 +44 207 6211111 +86 21 6132 2888 +65 6220 6144 +46 8 4734850

Sales Oslo (+47) Equity Fixed Income FX/IR

22 94 89 40 22 01 78 20 22 01 76 50

Regional sales (+47) Bergen Bod Fredrikstad Hamar Haugesund Lillehammer Kristiansand Oslo Stavanger Troms Trondheim Tnsberg lesund

55 21 95 80 75 52 9910 69 39 41 50 62 54 14 82 52 72 09 06 61 24 79 56 38 07 28 62 22 01 76 50 51 84 04 30 77 62 96 80 73 58 74 89 33 01 73 80 70 11 69 85

Research Regional Sales (+47) Eirik Larsen 22 01 76 55

Research FX/IR (+47) ystein Drum Kjersti Haugland Ole Andr Kjennerud Knut A. Magnussen Camilla Viland Kyrre Aamdal

22 01 76 56 22 01 78 03 22 01 78 24 22 01 76 63 22 01 77 41 22 01 76 67

Credit Research (+47) Ole Einar Stokstad Mikael L. Gjerding se Haagensen Rolv Kristian Heitmann Thomas Larsen Knut Olav Rnningen

22 01 78 37 22 01 77 62 22 01 76 93 22 01 76 77 22 01 77 36 22 01 78 15

DNB

Morning Report
27.02.2012

SPOT RATES AND FORECASTS

Oil spot & NOK TWI 124 120 116 112 108 104 100 17-Jan 102 100 98 96 94 92 24-Feb
$/b

6-Feb

NOK TWI ra.

1.25 1.20 1.15

EUR vs GBP & CHF 0.87 0.85 0.83

1.10 0.81 17-Jan 6-Feb 24-Feb

GBP r.a CHF

FX USDJPY EURUSD EURGBP EURCHF EURNOK EURSEK EURDKK USDNOK JPYNOK SEKNOK GBPNOK USDSEK JPYSEK NOKSEK GBPSEK

Prior 80.99 1.346 0.847 1.205 7.504 8.819 7.436 5.578 6.888 0.852 8.863 6.557 8.099 1.176 10.415

Last 81.12 1.344 0.848 1.205 7.497 8.817 7.436 5.580 6.882 0.851 8.846 6.566 8.093 1.177 10.408

% 0.2% -0.1% 0.1% 0.0% -0.1% 0.0% 0.0% 0.1% -0.1% -0.1% -0.2% 0.1% -0.1% 0.1% -0.1%

In 1 m ...3 m 77 77 1.30 1.30 0.83 0.83 1.23 1.23 7.60 7.75 8.90 9.20 7.45 7.45 5.85 5.96 7.59 7.74 0.85 0.84 9.2 9.3 6.85 7.08 5.27 5.45 1.17 1.19 10.72 11.08

...6 m ...12 m 80 85 1.35 1.40 0.85 0.87 1.23 1.30 7.65 7.65 9.00 9.00 7.45 7.45 5.67 5.46 7.08 6.43 0.85 0.85 9.0 8.8 6.67 6.43 5.33 5.46 1.18 1.18 10.59 10.34

FX AUD CAD CHF CZK DKK GBP HKD ISK KWD LTL LVL NZD PLN SGD RUB

USD 1.0674 1.0016 0.8961 18.66 5.5339 1.5859 7.7555 124.56 0.2774 2.5689 0.5195 0.8353 3.1026 1.2599 29.1190

% -0.25% 0.16% 0.03% 0.28% 0.12% -0.19% 0.02% 0.14% -0.02% 0.14% 0.08% -0.11% 0.24% 0.32% -0.17%

EURSEK & OMXS 9.0 8.9 8.8 8.7 17-Jan 6-Feb 550 500 450 400 350 24-Feb

OMXS ra. EURSEK

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

N IBOR Prior 2.25 2.66 2.96 3.19 2.95 3.20 3.43 3.65

SWAP AN D MON EYM ARKET RATES STIBOR EURIBOR Last Prior Last Prior 2.25 2.04 2.03 0.52 2.67 2.35 2.34 0.93 3.00 2.52 2.53 1.27 3.19 2.63 2.64 1.46 2.96 2.00 2.01 1.24 3.21 2.17 2.17 1.58 3.44 2.38 2.36 1.94 3.65 2.55 2.54 2.30

Last 0.51 0.92 1.26 1.45 1.25 1.58 1.94 2.30

USD LIBOR Prior 0.24 0.49 0.75 0.90 0.76 1.17 1.62 2.09

Last 0.24 0.49 0.75 0.90 0.75 1.17 1.61 2.06

Gov. Bonds, 10y 2.00 1.75 1.50

NOK, ra.

3.00 2.50 2.00 1.50

SEK

17-Jan 6-Feb 24-Feb

10y 10y yield vs bund

N ORWAY Prior Last 115.05 111.30 2.39 2.37 0.50 0.49

GOVERNM ENT BON DS SWEDEN GERMANY US Prior Last Prior Last Prior 114.626 114.63 101.022 101.04 100.20313 1.91 1.92 1.88 1.88 1.98 0.03 0.03 0.09

Last 100.38 1.97 0.09

JPY and DowJones 14 82 81 13 80 79 12 78 77 11 76 10 75 17-Jan 6-Feb 24-Feb

USDJPY ra. DowJones, 1000

In 3m 6m 12m

INTEREST RATE FORECASTS N ORWAY SWEDEN GERMANY 3m nibor 10y swap 3m stibor 10y swap 3m euribor 10y swap 2.65 3.50 2.40 2.25 1.05 2.50 2.55 3.75 2.20 2.50 1.05 2.75 2.60 4.25 2.00 3.00 1.05 3.25

US 3m libor 10y 0.50 0.50 0.50

swap 2.25 2.50 3.00

USD and gold 1900 1.42 1800 1.38 1700 1.34 1600 1.30 1500 1.26 17-Jan 6-Feb 24-Feb
EURUSD ra. Gold

FRA NOK MAR JUN SEP DEC FRA SEK MAR JUN SEP DEC

3m 2.62 2.47 2.47 2.49 3m 2.27 2.00 1.81 1.77

Prior 2.62 2.46 2.47 2.49 Prior 2.28 1.99 1.81 1.77

chg 0.00 0.01 0.00 0.00 chg -0.01 0.01 0.00 0.00

MISCELLANEOUS TWI Today % Stock ex. Today % NOK 93.75 - 0.06 Dow Jones 12,983.0 0.0% SEK 116.62 - 0.11 Nasdaq 2,963.8 0.2% EUR 105.55 - 0.04 FTSE100 5,935.1 0.0% USD 78.47 0.09 Eurostoxx50 2,523.7 0.6% GBP 80.50 Dax 6,864.4 0.8% Comm. Today Last Nikkei225 9,633.9 0.0% Brent spot 126.5 126.4 Oslo 427.64 1.0% Brent 1m 124.6 125.5 Stockholm 503.53 0.4% 0.6% Spot gold 0.0 1777.5 Copenhagen 587.91 Sources to all tables and graphics: Reuters and DNB Markets

Morning Report
27.02.2012
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