Morning Report

12.04.2012

U.S. Economy Continued to Expand

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

2.80 2.60 2.40 2.20

EURNOK

Federal Reserve's Beige Book indicates that the economy continued to expand at a modest to moderate pace. The markets generally had more risk appetite yesterday. U.S. stock markets gained yesterday after five days of decline. DJIA and S&P500 both increased by 0.7 per cent. The increase continued in Asia today, with an increase of 0.4 per cent for the Nikkei 225 and 0.3 per cent for the Hang Seng index. Investors had an eye on the development of earthquakes outside Malaysia, but calmed down after the tsunami alert was withdrawn. In bond markets, yields rose on 10year U.S. government bonds to 2.03 per cent, up 5 basis points since the U.S. markets closed the day before. The U.S. government's $21 billion offering of 10-year debt came largely in line with market expectations but some data within the auction results suggested weak demand, which was not surprising after bonds rallied back to expensive levels in the wake of last month's selloff. In Spain, 10-year government bond yield fell back a little yesterday. In the currency markets, the dollar weakened 0.4 percent against the euro over the past day and the Norwegian krone is a few re weaker against the euro from yesterday morning. Yesterday, the Federal Reserve presented its Beige Book. The report is a prosaic summary of the economic development based on surveys conducted by the twelve Federal Reserve District banks. The report indicated that the economy continued to expand at a modest to moderate pace from mid-February through late March. The formulations are marginally stronger than in the previous report by ultimo February. Manufacturing continued to expand in most Districts and increased optimism about future developments were noted, but also about rising petroleum prices. The latter is new compared to the previous report. In the residential real estate market, there are reports of improvement. Last time there were signs of increased turnover of existing homes. Now the report refers to the increased construction activity in some locations. Reports on retail spending were positive, with the unusually warm weather being credited for boosting sales in several Districts. While the near-term outlook for household spending was encouraging, contacts in several Districts expressed concerns that rising gas prices could limit discretionary spending in the months to come. Banking conditions were largely stable, with some improvement seen in loan demand. Several Districts reported increased credit quality. Hiring was steady or showed a modest increase across many Districts. Difficulty finding qualified workers, especially for high-skilled positions, was frequently reported. Upward pressure on wages was constrained, but as in Norway, the high activity in the petroleum sector with high oil prices, had led to upward pressure on wages in this sector. All in all, there was little change from the report in February. The report had a slightly more upbeat tone but also increased concerns of high oil prices. There was little in the report which gave support to the latter-day decline in stock markets. Also in the U.S. yesterday figures for the development of import and export prices for March were released. Import prices rose by 1.3 per cent from February to March. Beforehand, it was expected a decline of 0.8 per cent. Exclusive oil prices the import prices were up 0.3 per cent. The price of imported oil rose by 4.3 per cent. Export prices rose by 0.8 per cent, against an expected increase of 0.4 per cent. It was especially foods that pulled up. In Norway, manufacturing output fell by 0.7 per cent from January to February after a previously reported increase of 1.1 percent in January. The production level in February was just 0.8 per cent over the corresponding month last year and shows that there has been a rather weak trend in manufacturing production over the past year. There are large differences in industrial production. Metal and machine industry had a clear increase in production. Nevertheless, production of capital goods fell by 0.5 per cent last month. Production of intermediate goods rose by 0.2 per cent from January to February and has had a fairly high growth over the past year. Manufacture of wood and wood products pulled up with growth of over 6 per cent last month and can be associated with increased activity in the construction industry. Production of consumer goods fell 0.9 per cent m/m, and has fallen 4.6 per cent last year. All in all the production seems relatively sideways, but with large differences between sectors. These production figures show a much weaker growth than the PMI index shows. kyrre.aamdal@dnb.no As of Unit Prior Yesterdays key economic events (GMT) 08:00 Norway Manuf. production Feb m/m % 1.1 12:30 USA Import prices Mar m/m % 0.4 18:00 USA Beige Book As of Unit Prior Todays key economic events (GMT) 07:30 Sweden CPI Mar y/y % 1.9 08:00 Norway Central Bank Governor Olsen speaks to Fagforbundet 09:00 EMU Industrial production Feb m/m % 0.2 12:30 USA Initial claims W 14 1000 357 Poll 0.6 0.6 Poll 1.5 -0.2 355 Actual -0.7 1.3 DNB

2-Mar 22-Mar 11-Apr

SEK & 3m STIBOR 9.0 8.9 8.8 8.7 2-Mar

3m ra.

2.40 2.20 2.00 22-Mar 11-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
12.04.2012

SPOT RATES AND FORECASTS

Oil spot & NOK TWI 135 125 115 105 2-Mar 22-Mar 96 94 92 90 11-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 2-Mar 22-Mar 11-Apr

GBP r.a CHF

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

Prior 80.92 1.311 0.824 1.203 7.620 8.918 7.438 5.813 7.189 0.857 9.247 6.807 8.417 1.171 10.828

Last 81.12 1.314 0.825 1.202 7.613 8.909 7.438 5.798 7.150 0.855 9.239 6.783 8.366 1.171 10.809

% 0.2% 0.2% 0.0% -0.1% -0.1% -0.1% 0.0% -0.3% -0.5% -0.1% -0.1% -0.4% -0.6% -0.1% -0.2%

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 1.0397 1.0004 0.9153 18.91 5.6629 1.5935 7.7644 127.29 0.2784 2.6290 0.5327 0.8219 3.1844 1.2549 29.5850

% 0.84% -0.38% -0.27% -0.40% -0.21% 0.16% -0.01% -0.27% 0.00% -0.22% -0.21% 0.40% -0.56% -0.24% -0.25%

EURSEK & OMXS 9.0 8.9 8.8 8.7 2-Mar 22-Mar 550 500 450 400 350 11-Apr

OMXS ra. EURSEK

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

NIBOR Prior 1.92 2.32 2.68 2.84 2.88 3.14 3.35 3.58

SWAP AND MONEYMARKET RATES STIBOR EURIBOR Last Prior Last Prior 1.95 1.95 1.94 0.36 2.33 2.22 2.21 0.67 2.67 2.45 2.45 1.00 2.83 2.56 2.55 1.18 2.89 2.04 2.05 1.17 3.13 2.20 2.21 1.53 3.35 2.36 2.38 1.89 3.57 2.51 2.53 2.24

Last 0.36 0.67 1.00 1.18 1.18 1.53 1.88 2.25

USD LIBOR Prior Last 0.24 0.24 0.47 0.47 0.73 0.73 0.89 0.89 0.71 0.73 1.17 1.17 1.63 1.65 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

2-Mar 22-Mar 11-Apr

10y 10y yield vs bund

NORWAY Prior Last 115.3 111.65 2.33 2.31 0.63 0.61

GOVERNMENT BONDS SWEDEN GERMANY US Prior Last Prior Last Prior 115.534 115.60 102.694 102.58 99.671875 1.81 1.80 1.70 1.71 2.04 0.11 0.09 0.34

Last 99.63 2.05 0.34

13.5 13.0 12.5

JPY and DowJones

85 80

12.0 2-Mar

75 22-Mar 11-Apr
USDJPY ra. DowJones, 1000

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
% 0.01 0.06 0.11 - 0.09 - 100.0 Last 121.1 120.2 1658.0

US 3m libor 10y 0.50 0.50 0.50

swap 2.50 2.50 3.00

% 0.7% 0.8% 0.7% 0.9% 1.0% 0.0% 0.6% 1.1% -0.2%

USD and gold 1900 1800 1700 1600 1500

EURUSD ra.

1.42 1.38 1.34 1.30 1.26

Gold

2-Mar 22-Mar 11-Apr

MISCELLANEOUS FRA NOK 3m Prior chg TWI Today JUN 2.26 2.26 0.00 NOK 95.23 SEP 2.26 2.26 0.00 SEK 118.16 DEC 2.34 2.34 0.00 EUR 103.52 MAR 2.42 2.40 0.02 USD 79.63 FRA SEK 3m Prior chg GBP 0.00 JUN 2.08 2.07 0.01 Comm. Today SEP 1.92 1.90 0.01 Brent spot 121.1 DEC 1.90 1.89 0.01 Brent 1m 120.6 MAR 1.89 1.88 0.01 Spot gold 0.0 Sources to all tables and graphics: Reuters and DNB Markets

Stock ex. Today Dow Jones 12,805.4 Nasdaq 3,016.5 FTSE100 5,634.7 Eurostoxx50 2,341.4 Dax 6,674.7 Nikkei225 9,524.8 Oslo 411.32 Stockholm 481.01 Copenhagen 585.40

Morning Report
12.04.2012
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