Morning Report

10.04.2012

Weak Start on April

NOK & 3m NIBOR 7.70 7.60 7.50 7.40 7.30
3m ra.

2.80 2.60 2.40 2.20

EURNOK

The main U.S. stock market indices fell again yesterday. Disappointing U.S. payrolls figures for March are highlighted as a cause. But also several other figures have been released during the Easter. DJIA fell by 1 percent, the S&P500 by 1.1 per cent from Friday. Both indices have fallen four days in a row. Accordingly, 10-year Treasury yield fell and closed yesterday at 2.04 per cent. 19. March, this rate was 2.38 per cent and 3 April closed at 2.28 per cent. In the currency market the dollar weakened slightly against the euro yesterday, but is about 0.6 per cent stronger since our last report on Wednesday morning. EURNOK trades this morning around 7.56, roughly where it traded on Wednesday. Last week's most important figures were the U.S. employment figures. Non-farm payrolls rose by 120,000 people in March. It was well below expectations and lower than the growth in previous months. ADP employment came earlier last week and showed a growth of 209' persons in the private sector. It contributed to the disappointment of Friday's LBS numbers. There were only minor revisions of the figures for January and February. It seems as if an unusually warm winter contributed to the strong growth in January and February, but the average growth in the first three months is still solid 212'. Unemployment rate declined from 8.3 per cent to 8.2 per cent, but the decline is probably not due to unemployed getting work, but rather that more have withdrawn from the workforce. The initial claims have fallen in recent weeks, but the number last week was unchanged from the week before. Also the non-manufacturing ISM disappointed last week with a 1.3 points decline in March. Thursday was the monetary policy meeting of the European Central Bank. Interest rates were kept unchanged as most people expected. ECB still sees a downside risk to economic growth, but estimates that inflation will remain above 2 per cent this year. Inflation is expected to fall under 2 per cent early in 2013. Some noted a slightly more hawkish tone in the statements this time where the ECB commented that upside risks to inflation would be handled in a "firm and timely" manner and interest rate cut was not discussed,. But at the press conference, Governor Draghi said that it was premature to ask about exit strategy and that inflation expectations were well anchored. It wasn our opinion no signals to either rate increases or cuts in the near future. We expect that interest rates would increase the earliest in 2014. In the euro zone PMI for the service sector rose 0.4 points to 49.2 in March. It was 0.5 points higher than the flash estimate, but the level is still low. Retail sales fell as expected, by 0.1 per cent from January to February. There was a decline in German retail, but up in French. Overall, the underlying growth remained weak, falling by an estimated 3 per cent annualized. Tighter budgets, rising unemployment and low consumer confidence point to continued weak growth in consumption in the future. In Germany, orders rose by 0.3 per cent from January to February, but expectations were well above this. The increase came after the marked decline in January. Neither the production figures were particularly encouraging. Commodity production in February fell by 1.3 per cent, also lower than average expectations. In particular, production in the construction sector that pulled down in February, but manufacturing production has weakened substantially in a short time. In the UK manufacturing production fell by 1 per cent from January to February after also falling in January. However, the CIPS for the service sector was up by 1.5 points to 55.3 in March, which is consistent with a GDP growth of 2 per cent. Moreover, house prices, according to Halifax increased by 2.2 per cent from February to March. Bank of England chose to keep interest rates unchanged and continued to the approved program of quantitative easing (which was extended by GBP 50 billion on 9 February).It is likely that interest rates will remain unchanged until well into 2014, but increased quantitative easing may come as early as May. In China HSBCs services PMI fell 0.6 p to 53.3 in March. It is somewhat below the average for the past five years. It supports the picture of a slowdown in the Chinese economy, but no recession. Yesterday there were figures showing that inflation picked up slightly in March. The increase was driven by energy and food prices. kyrre.aamdal@dnb.no Yesterdays key economic events (GMT) 12:30 USA Non-farm payrolls 12:30 USA Unemployment 01:30 China CPI Todays key economic events (GMT) 07:30 Sweden Manuf. production 08:00 Norway CPI-ATE 08:00 Norway CPI As of Mar Mar Mar As of Feb Mar Mar Unit m/m, k % y/y, % Unit m/m,% y/y, % y/y, % Prior 240r 8.3 3.2 Prior 3.6 1.3 1.2 Poll 225 8.3 3.4 Poll -0.3 1.4 0.9 Actual 120 8.2 3.6 DNB 1.3 0.9

29-Feb 20-Mar 9-Apr

SEK & 3m STIBOR 9.0 8.9 8.8 8.7 29-Feb 20-Mar

3m ra.

2.40 2.20 2.00 9-Apr

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

56 13 27 20 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

Morning Report
10.04.2012

SPOT RATES AND FORECASTS

Oil spot & NOK TWI 135 125 115 105 29-Feb 20-Mar 96 94 92 90 9-Apr
$/b

NOK TWI ra.

1.22 1.21 1.21

EUR vs GBP & CHF 0.85 0.84 0.83

1.20 0.82 29-Feb 20-Mar 9-Apr

GBP r.a CHF

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

Prior 81.58 1.311 0.825 1.202 7.577 8.857 7.441 5.782 7.096 0.857 9.185 6.761 8.294 1.170 10.741

Last 81.32 1.310 0.825 1.202 7.592 8.867 7.441 5.800 7.137 0.857 9.207 6.768 8.334 1.169 10.754

% -0.3% -0.1% 0.1% 0.0% 0.2% 0.1% 0.0% 0.3% 0.6% 0.0% 0.2% 0.1% 0.5% -0.1% 0.1%

In 1 m ...3 m 83 84 1.30 1.30 0.83 0.83 1.23 1.23 7.60 7.60 8.90 9.20 7.45 7.45 5.85 5.85 7.04 6.96 0.85 0.83 9.2 9.2 6.85 7.08 5.68 5.94 1.17 1.21 10.72 11.08

...6 m ...12 m 85 85 1.35 1.40 0.85 0.87 1.23 1.30 7.60 7.60 9.00 9.00 7.45 7.45 5.63 5.43 6.62 6.39 0.84 0.84 8.9 8.7 6.67 6.43 5.67 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 % 1.0298 -0.09% 0.9980 0.02% 0.9178 ####### 18.90 0.16% 5.6822 0.04% 1.5875 -0.14% 7.7653 -0.01% 127.96 0.06% 0.2787 -0.01% 2.6373 0.13% 0.5348 -0.17% 0.8201 -0.19% 3.1890 -0.05% 1.2609 -0.10% 29.6690 0.21%

EURSEK & OMXS 9.0 8.9 8.8 8.7 29-Feb 20-Mar 550 500 450 400 350 9-Apr

OMXS ra. EURSEK

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

NIBOR Prior 1.98 2.33 2.67 2.86 2.92 3.18 3.39 3.62

SWAP AND MONEYMARKET RATES STIBOR EURIBOR Last Prior Last Prior 1.99 1.98 1.96 0.36 2.34 2.25 2.23 0.67 2.65 2.48 2.47 1.01 2.84 2.58 2.58 1.19 2.88 2.11 2.09 1.17 3.12 2.24 2.19 1.53 3.34 2.40 2.36 1.90 3.56 2.55 2.49 2.27

Last 0.36 0.67 1.00 1.19 1.17 1.52 1.87 2.23

USD LIBOR Prior Last 0.24 0.24 0.47 0.47 0.73 0.73 0.89 0.89 0.73 0.74 1.17 1.19 1.64 1.66 2.13 2.14

Gov. Bonds, 10y 2.25 2.00 1.75 1.50

NOK, ra.

3.00 2.50 2.00 1.50

SEK

29-Feb 20-Mar 9-Apr

10y 10y yield vs bund

NORWAY Prior Last 114.65 111.45 2.44 2.34 0.70 0.64

GOVERNMENT BONDS SWEDEN GERMANY US Prior Last Prior Last Prior 115.07 115.07 102.332 102.69 99.578125 1.86 1.86 1.74 1.70 2.05 0.12 0.16 0.31

Last 99.58 2.06 0.36

13.5 13.0 12.5

JPY and DowJones

85 80

12.0 29-Feb 20-Mar

75 9-Apr

In 3m 6m 12m

INTEREST RATE FORECASTS NORWAY SWEDEN GERMANY 3m nibor 10y swap 3m stibor 10y swap 3m euribor 10y swap 2.30 3.50 2.15 2.75 0.80 2.50 2.45 3.75 2.10 2.75 0.80 2.75 2.60 4.25 2.00 3.00 0.80 3.25
% 0.39 0.50 - 0.11 0.07 0.2 Last 124.4 122.7 1631.0

US 3m libor 10y 0.50 0.50 0.50

swap 2.50 2.50 3.00

% : : : : : 0.0% : : :

USDJPY ra. DowJones, 1000

USD and gold 1900 1800 1700 1600 1500

EURUSD ra.

1.42 1.38 1.34 1.30 1.26

Gold

29-Feb 20-Mar 9-Apr

MISCELLANEOUS FRA NOK 3m Prior chg TWI Today JUN 2.25 2.27 -0.02 NOK 94.96 SEP 2.26 2.28 -0.02 SEK 117.58 DEC 2.34 2.36 -0.02 EUR 103.38 MAR 2.42 2.46 -0.04 USD 79.81 FRA SEK 3m Prior chg GBP 82.20 JUN 2.09 2.10 -0.01 Comm. Today SEP 1.94 1.96 -0.02 Brent spot 122.7 DEC 1.91 1.96 -0.05 Brent 1m 122.3 MAR 1.90 1.94 -0.04 Spot gold 0.0 Sources to all tables and graphics: Reuters and DNB Markets

Stock ex. Today Dow Jones 12,929.6 Nasdaq 3,047.1 FTSE100 Eurostoxx50 Dax Nikkei225 9,538.0 Oslo #N/A ND Stockholm #N/A ND Copenhagen #N/A ND

Morning Report
10.04.2012
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