Morning Report

29.02.2012

More upbeat US consumers

NOK & 3m NIBOR 7.80 7.60 7.40
3m ra.

2.90 2.60 2.30

EURNOK

American consumer confidence surprised positively, while the orders of durable goods disappointed. Today the focus is on the ECB and the banks' demand for 3-year loan (LTRO). US consumer confidence, measured by the Conference Board index, surprise positively in February. Despite the sharp rise in gasoline prices, consumer confidence rose from 61.5 in January to 70.8 in February - the highest level in a year. The increase was due both to a better assessment of the current situation and brighter prospects. It is likely that the improvement in the labor market and the stock market has contributed to improvement. Consumer confidence is still well below its long-term average, pointing in the direction of a consumption growth of around 2%. While consumer confidence surprised positively, the figures for new orders of durable goods in January disappointed. The decline was 4%, and even corrected for the volatile transportation orders there was a decrease of 3.2%. Also deliveries outside both the defence and transport fell by over 3%. This indicates a weaker investment future development. The markets emphasised the improvement in consumer confidence and the US stock market got a little lift. Dow Jones ended yesterday over 13 000 for the first time since 2008. The euro continued to appreciate against the dollar and the EURUSD is approaching 1.35. Today's main event is the announcement of the loan volume for the second round with a three year loan (LTRO) from the ECB to the private banks. In the first round in December, the banks lent 493 billion euro to 1% interest rate. It is expected that banks will lend nearly as much this time (470 billion according to Bloomberg), but the uncertainty is large. How will the market react if the volume differs from expectations? A large volume can indicate that banks have bigger problems than expected, but can also be interpreted positively in the sense that policy. We also suggest that the positive interpretation will prevail, and that a small volume will thus be interpreted negatively. Italy completed two successful issues in the government bond markets yesterday. The interest rate on a ten-year loan ended up at 5.5%, while the interest rate on a five-year loan was 4.2%. Interest levels were the lowest since respectively. August and May last year and both loans were around 40% oversubscribed. The overall indicator of sentiment in the euro zone (ESI) rose from 93.4 in January to 94.4 in February. It was expected that the index would rise, but only half of what was actually the case. It was improved prospects for the industry, and construction that pulled up, while consumer confidence rose only marginally. Country-wise, it was France and Italy drew up, while the German index was unchanged and the Spanish fell. The indicator is consistent with the relatively flat trend in GDP so far in the first quarter, which could mean that the euro zone as a whole avoids recession (two consecutive quarters of decline). For the South, however, suggests a deep recession indicator. Today released the figures for unemployment in Germany in February. It is expected that unemployment will fall slightly this month, but that rate will remain unchanged at 6.7%. The Norges Bank Watch report (released yesterday), rightly criticized the central bank for not having been clear enough in the communication of their interest rate decisions. It was specifically pointed out that interest rate decisions in August and in December, surprised a large majority of analysts. It remains to be seen whether the criticism affects the communication from the central bank. Today Norges Bank's regional network survey is published. In light of other studies, we believe that the outlook has improved somewhat since the previous survey, with a still divided outlook for Norwegian industries. Otherwise, the credit indicator for January is out today. It is expected that credit growth will remain unchanged at 6.7%. Continued strong activity in the housing market shows that household credit growth will remain high. From Sweden the GDP for the fourth quarter is released (we expect a decline of 0.6%) and the minutes from the central bank's monetary policy meeting is also published today. In the United States keeps Governor Bernanke's semi-annual speech to the American Congress. The Central Bank is unlikely to come up with new signals on monetary policy on this occasion. In addition, the Beige Book describing the situation in the US economy ahead of the upcoming monetary policy meeting on 13 March. knut.magnussen@dnb.no

19-Jan 8-Feb 28-Feb

SEK & 3m STIBOR 9.0 8.9 8.8 8.7 19-Jan 8-Feb

3m ra.

2.70 2.60 2.50 2.40 2.30 28-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

As of Unit Yesterday's key economic events (GMT) 09:00 EMU Sentiment index Feb Index 12:30 USA Orders, ex. transport Jan m/m % 14:00 USA Cons. confidence, CB Feb index As of Unit Todays key economic events (GMT) 08:30 Sweden GDP Q4 q/q % 09:00 Norway Norges Banks's regional network survey 1/2012 10:15 EMU LTRO allotment

Prior 93.4 2.2 61.1 Prior 1.6

Poll 93.5 0.0 63.1 Poll

Actual 94.4 -3.2 70.8 DNB -0.6

Morning Report
29.02.2012

SPOT RATES AND FORECASTS

Oil spot & NOK TWI 130 120 110 100 19-Jan 8-Feb 102 100 98 96 94 92 28-Feb
$/b

NOK TWI ra.

1.25 1.20 1.15

EUR vs GBP & CHF 0.87 0.85 0.83

1.10 0.81 19-Jan 8-Feb 28-Feb

GBP r.a CHF

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

Prior 80.45 1.347 0.847 1.205 7.482 8.823 7.436 5.561 6.913 0.850 8.837 6.553 8.147 1.181 10.423

Last 80.45 1.348 0.846 1.205 7.487 8.825 7.436 5.556 6.911 0.849 8.854 6.552 8.146 1.180 10.433

% 0.0% 0.0% -0.1% 0.0% 0.1% 0.0% 0.0% -0.1% 0.0% 0.0% 0.2% 0.0% 0.0% -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 1.0814 0.9934 0.8947 18.50 5.5195 1.5932 7.7552 124.58 0.2774 2.5633 0.5189 0.8425 3.0682 1.2469 29.0560

% 0.32% -0.14% -0.04% -0.08% -0.06% 0.16% -0.01% -0.06% 0.03% -0.07% -0.10% 0.52% -0.09% -0.32% 0.26%

EURSEK & OMXS 9.0 8.9 8.8 8.7 19-Jan 8-Feb 550 500 450 400 350 28-Feb

OMXS ra. EURSEK

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

N IBOR Prior 2.23 2.66 2.98 3.18 2.91 3.15 3.38 3.59

SWAP AN D MON EYM ARKET RATES STIBOR EURIBOR Last Prior Last Prior 2.22 2.04 2.04 0.51 2.63 2.35 2.36 0.92 2.98 2.54 2.54 1.25 3.17 2.65 2.65 1.44 2.91 2.02 2.02 1.22 3.16 2.18 2.18 1.56 3.38 2.38 2.38 1.91 3.59 2.56 2.56 2.27

Last 0.50 0.91 1.25 1.44 1.22 1.56 1.92 2.27

USD LIBOR Prior 0.24 0.49 0.75 0.90 0.68 1.09 1.55 2.02

Last 0.24 0.49 0.75 0.90 0.69 1.10 1.56 2.03

Gov. Bonds, 10y 2.00 1.75 1.50

NOK, ra.

3.00 2.50 2.00 1.50

SEK

19-Jan 8-Feb 28-Feb

10y 10y yield vs bund

N ORWAY Prior Last 115.35 111.70 2.32 2.33 0.51 0.53

GOVERNM ENT BON DS SWEDEN GERMANY US Prior Last Prior Last Prior 114.846 114.86 101.785 101.81 100.53125 1.90 1.89 1.81 1.80 1.94 0.09 0.09 0.13

Last 100.55 1.95 0.15

JPY and DowJones 14 82 81 13 80 79 12 78 77 11 76 10 75 19-Jan 8-Feb 28-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 2.15 2.25 1.05 2.50 2.55 3.75 2.10 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 19-Jan 8-Feb 28-Feb
EURUSD ra. Gold

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

3m 2.61 2.44 2.44 2.46 3m 2.31 2.03 1.84 1.80

Prior 2.61 2.44 2.44 2.46 Prior 2.32 2.03 1.85 1.81

chg 0.00 0.00 0.00 0.00 chg -0.01 0.00 0.00 0.00

MISCELLANEOUS TWI Today % Stock ex. Today % NOK 93.63 0.05 Dow Jones 13,005.1 0.2% SEK 116.68 - 0.12 Nasdaq 2,986.8 0.7% EUR 105.45 - 0.03 FTSE100 5,927.9 0.2% USD 78.16 - 0.07 Eurostoxx50 2,519.7 0.3% GBP 80.50 Dax 6,887.6 0.6% Comm. Today Last Nikkei225 9,723.2 0.0% Brent spot 125.6 125.6 Oslo 430.54 0.4% Brent 1m 122.3 121.6 Stockholm 504.06 0.7% 1.2% Spot gold 0.0 1781.0 Copenhagen 587.62 Sources to all tables and graphics: Reuters and DNB Markets

Morning Report
29.02.2012
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