Morning Report

16.04.2012

Weak end to the week

NOK & 3m NIBOR 7.70 2.80 7.60 2.60 7.50 2.40 7.40 2.20 7.30 6-Mar 26-Mar 13-Apr
3m ra. EURNOK

Somewhat slower growth in China in the first quarter and weaker sentiment index from the United States dominated the markets on Friday. In addition, figures from the Bank of Spain showed that Spanish banks increased their borrowing at the ECB sharply in March. The U.S. Michigan Sentiment Index fell from 76.2 in March to 75.7 in April, while the expectations where for unchanged consumer confidence. After a month of moderate job growth and a drop in income for households, American consumers are now more skeptical about the current situation than they were in March. It shouldn't surprise anyone that the figures from the Bank of Spain showed that the Spanish banks' borrowing in the ECB rose sharply in March in connection with the three-year loans from the ECB. But renewed focus made the cost of credit insurance on the Spanish government rise to record levels. U.S. consumer prices rose as expected 0.3% from February to March, and contributed little to market movements. Weaker macro numbers than expected and increasing concerns about the situation in Spain contributed to a weaker euro. Against the dollar, the euro has weakened by 1.1% since Friday. For the fourth week in a row, there was good demand for U.S. government and interest rates on 10 year bonds remains below 2 percent. The Norwegian krone strengthened against the euro on an otherwise quiet day. Stock markets in both the U.S. and Europe fell on the last day of the week. In particular, Euro Stoxx 50 and DAX, fell as a result of the focus on Spanish banks. S&P 500 also fell, despite the fact that both JP Morgan and Wells Fargo reported better first-quarter figures than expected. Despite a pending risk attitude, both the Australian and New Zealand dollars strengthened on expectations that the Chinese authorities will implement measures to stimulate growth. The People's Bank of China widened the exchange rate band for the renminbi against the dollar from +/- 0.5% to +/- 1.0%. The last time the band was widened was in 2007. The widening comes after the central bank earlier this month expanded quotas for foreigners' purchases of stocks and bonds. The timing of the expansion is hardly accidental. This week there are a series of meetings in both the IMF and the World Bank, and the U.S. Treasury's report on exchange rate policy was set to 15 April. The release of the report has now been postponed. The parties to the wage settlement in the industry came to terms yesterday, thereby avoiding a strike. Overall framework for benchmark settlements is not given, but it may indicate that other groups will assume at least 4 percent wage growth. This is higher than Norges Bank's forecast of 3 percent. Today, the most important on the agenda is U.S. retail figures for March. Despite a weaker labor market figures, it is expected that households have sustained their consumption. In the rest of the week there are several interesting events and key figures. Renewed fears for growth prospects in the euro area makes next week's ZEW and IFO indices interesting. Although growth in the German economy is still strong, there are signs that may indicate a slowdown in the growth rate. We expect no change in either interest rate or interest rate path at the meeting of the Swedish central bank on Wednesday. IMF publishes World Economic Outlook, Fiscal Monitor and the Global Financial Stability Report this week. There will also be held spring meetings at the IMF and World Bank. Many will probably examine the reports and statements for comments about the euro crisis. Sunday is the first round of the French presidential election, but according to opinion polls, there will be no final decision until a new election round is held on 6 May. magne.ostnor@dnb.no

SEK & 3m STIBOR 9.0 8.9 8.8 8.7 6-Mar 2.40 2.20 2.00 26-Mar 13-Apr
EURSEK

3m ra.

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

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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 Magne stnor 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 57 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

Yesterdays key economic events (GMT) 02:00 China GDP 12:30 USA CPI 12:30 USA CPI ex. food/energy Todays key economic events (GMT) 08:00 Norway Trade balance 12:30 USA Retail Sales ex. cars 12:30 USA Empire State (NY Fed)

As of Q1 Mar Mar As of Mar Mar Apr

Unit k/k % m/m % m/m % Unit Bln. NOK m/m % index

Prior 2.0 0.4 0.1 Prior 45.3 0.9 20.2

Poll 1.6 0.3 0.2 Poll 0.6 21.1

Actual 1.8 0.3 0.2 DNB

Morning Report
16.04.2012

SPOT RATES AND FORECASTS

Oil spot & NOK TWI 135 125 115 105 6-Mar 96 94 92 90 13-Apr
$/b

26-Mar

NOK TWI ra.

EUR vs GBP & CHF 1.22 0.85 1.21 1.21 1.20

GBP r.a

0.84 0.83 0.82

CHF

6-Mar 26-Mar 13-Apr

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

Prior 80.97 1.308 0.826 1.203 7.570 8.886 7.439 5.787 7.154 0.853 9.195 6.807 8.415 1.174 10.768

Last 80.65 1.302 0.823 1.203 7.579 8.890 7.440 5.824 7.218 0.853 9.218 6.834 8.477 1.174 10.818

% -0.4% -0.4% -0.4% 0.0% 0.1% 0.0% 0.0% 0.6% 0.9% 0.0% 0.2% 0.4% 0.7% 0.0% 0.5%

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 1.0342 0.9999 0.9235 19.04 5.7141 1.5833 7.7593 128.15 0.2789 2.6523 0.5371 0.8213 3.2260 1.2541 29.7320

% -0.39% 0.02% 0.44% 0.94% 0.45% -0.11% -0.01% 0.27% 0.06% 0.40% 0.43% -0.44% 0.80% 0.45% 0.46%

EURSEK & OMXS 9.0 8.9 8.8 8.7 6-Mar

OMXS ra. EURSEK

550 500 450 400 350 26-Mar 13-Apr

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

NIBOR Prior 1.96 2.32 2.67 2.83 2.84 3.10 3.33 3.56

SWAP AND MONEYMARKET RATES STIBOR EURIBOR Last Prior Last Prior 1.96 1.94 1.93 0.36 2.31 2.19 2.18 0.66 2.64 2.44 2.42 0.99 2.81 2.55 2.54 1.17 2.86 2.02 2.00 1.14 3.11 2.17 2.16 1.50 3.33 2.34 2.33 1.86 3.55 2.49 2.49 2.22

Last 0.36 0.66 0.99 1.17 1.14 1.50 1.85 2.22

USD LIBOR Prior Last 0.24 0.24 0.47 0.47 0.73 0.73 0.89 0.89 0.69 0.71 1.15 1.14 1.61 1.62 2.09 2.09

Gov. Bonds, 10y 2.25 2.00 1.75 3.00 2.50 2.00

1.50 1.50 6-Mar 26-Mar 13-Apr

NOK, ra. SEK

10y 10y yield vs bund

NORWAY Prior Last 115.72 112.18 2.28 2.25 0.54 0.53

GOVERNMENT BONDS SWEDEN GERMANY US Prior Last Prior Last Prior 115.947 115.89 100.19 100.20 100.09375 1.77 1.77 1.74 1.73 1.99 0.03 0.04 0.25

Last 100.16 1.99 0.26

JPY and DowJones 85 13.5 13.0 80 12.5 75 12.0 6-Mar 26-Mar 13-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
% 0.12 0.19 - 0.39 0.25 - 100.0 Last 121.1 121.8 1666.5

US 3m libor 10y swap 0.50 2.50 0.50 2.50 0.50 3.00

% -1.1% -1.4% -1.0% -2.6% -2.4% 0.0% -1.0% -2.0% -0.4%

USD and gold 1900 1.42 1800 1.38 1700 1.34 1600 1.30 1500 1.26 6-Mar 26-Mar 13-Apr
EURU SD ra. Gold

MISCELLANEOUS FRA NOK 3m Prior chg TWI Today JUN 2.25 2.25 0.00 NOK 94.77 SEP 2.26 2.26 0.00 SEK 118.00 DEC 2.31 2.32 -0.01 EUR 102.86 MAR 2.40 2.41 -0.01 USD 80.08 FRA SEK 3m Prior chg GBP 0.00 JUN 2.03 2.05 -0.02 Comm. Today SEP 1.86 1.89 -0.02 Brent spot 121.1 DEC 1.84 1.87 -0.02 Brent 1m 119.7 MAR 1.84 1.86 -0.03 Spot gold 0.0 Sources to all tables and graphics: Reuters and DNB Markets

Stock ex. Today Dow Jones 12,849.6 Nasdaq 3,011.3 FTSE100 5,651.8 Eurostoxx50 2,291.5 Dax 6,583.9 Nikkei225 9,470.6 Oslo 413.72 Stockholm 481.80 Copenhagen 591.04

Morning Report
16.04.2012
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