Morning Report

12.07.2013

China accepts lower growth

7.90
7.70

7.50 14-Jun

28-Jun

1.90 1.80 1.70 1.60 1.50 12-Jul

Renewed political tension in Portugal and Italy. On Wednesday night Bernanke assured that highly accommodative policy is needed for the foreseeable future, and that tapering of bond purchases does not qualify as tightening policy. The message went through, boosting risk appetite and stock markets yesterday. Dow Jones and S&P500 reached new record highs. EURUSD is unchanged from yesterday morning, and in the bond market, changes are small. NOK and SEK have weakened somewhat. In Asia todays session has been negative so far, with the exception of Nikkei which edges up. Ahead of the Q2 GDP release on Monday the Chinese government signals willingness to tolerate significantly lower growth in the second half of 2013. According to China's official news agency China's Minister of Finance Lou Jiwei yesterday said that growth in China may come to 7 percent in 2013. This is 0.5 percentage point lower than the growth target approved by the government four months ago. Jiwei also pointed out that 7 percent should not be regarded as a lower limit, and that even though China's economy is growing more slowly, the structural reforms are paying off. In Portugal, government bond yields are on the rise again. The 10-year yield is currently just below 7, a level last seen in the end of 2012. Last week the coalition government, which consists of two parties, barely avoided to fall apart. Both the Finance and the Foreign Minister resigned; the former due to lack of support for his austerity policies, the latter in protest against the appointment of a new hardliner as finance minister. During the weekend, Prime Minister Passos Coelho managed to stabilize the government, and the Foreign Minister was promoted to Deputy Prime Minister. Yesterday, it was expected that the President of Portugal, Anbal Cavaco Silva, would endorse the cabinet reshuffle. Instead he surprised by asking for an alternative solution: what he calls "a commitment of national salvation." He wants the coalition government to strike a medium-term agreement with the main opposition party, the center-left Socialists, which will ensure that Portugal will exit the bail-out program as scheduled in June 2014. This will not be easy. Socialists have recently called for early elections, after great success at the polls due to opposition to many of the austerity measures. President Cavaco Silva supports the idea of early elections, but not until Portugal has exited the bail-out program next year. Italy's fragile governing coalition is also under great pressure. Wednesday Prime Minister Letta had to cancel a meeting between party leaders where a controversial property tax was to be discussed. This was because Berlusconi's party PDL blocked the work of the parliament in protest against the Supreme Court decision to set an earlier date for hearing Berlusconis tax fraud appeal, namely on 30 July. If the conviction is upheld, there will be no further right to appeal, and Berlusconi will be banned from holding public office and hence he has to leave the parliament. In that case it is not unlikely that he and his party will protest by leaving the governing coalition and seek support from the public by demanding new elections. Swedish inflation was in line with the Riksbanks and consensus' expectations yesterday. CPI measured by fixed mortgage costs (CPIF) rose by 0.9 percent y/y in June, up from 0.7 percent in May. CPI inflation is still negative but approaching to zero (-0.1 percent y/y in June). Inflation is far below the target of 2 percent, but the bottom was probably reached in April. The Riksbank expects core inflation to slowly and gradually approach the target, estimated annual CPIF growth close to 2 percent in 2015. Other macro news: US initial claims rose by 16 'to 360' last week. The numbers fluctuate widely and the trend remains sideways at a level indicating increased employment. Today we get the preliminary outcome of Michigan's consumer confidence survey in July. A slight decline in the expectations index is expected, after two months of recovery. We also get figures for industrial production in the euro zone. These are expected to show a decline of 0.2 percent from April to May. kjersti.haugland@dnb.no

EURNOK

Norw ay: 10y Gov't Bond

28-Jun

105 95 85 75 65 12-Jul
Diff (bp, rha)

Headquarter Dronning Eufemias gate 30 0191 Oslo Offices Abroad New York London Singapore Stockholm Sales Oslo (+47) Equity Fixed Income Regional Sales (+47) Bergen Bod Fredrikstad Hamar Lillehammer Kristiansand Oslo Stavanger Troms Trondheim Tnsberg lesund Private Clients Research Regional Sales (+47) Eirik Larsen Research FX/IR (+47) ystein Drum Kjersti Haugland Ole Andr Kjennerud Knut A. Magnussen Camilla Viland Magne stnor Kyrre Aamdal Credit Research (+47) Ole Einar Stokstad Martin Brter Mikael L. Gjerding Rolv Kristian Heitmann Thomas Larsen Knut Olav Rnningen Kristina Solbakken Magnus Vie Sundal

+47 03000

+ 1 212 681 2550 +44 207 283 0050 +65 6220 6144 +46 84 73 48 50

22 94 89 40 24 16 90 30

56 13 27 20 75 52 99 10 69 39 41 50 62 54 14 82 61 24 79 56 38 14 61 64 24 16 90 80 51 84 04 30 77 64 76 30 73 87 49 73 33 01 73 80 70 11 69 85 24 16 90 90

24 16 90 77

24 16 90 08 24 16 90 03 24 16 90 07 24 16 90 04 24 16 90 01 24 16 90 06 24 16 90 02

24 16 90 48 24 16 90 46 24 16 90 47 24 16 90 49 24 16 90 44 24 16 90 45 24 16 90 51 24 16 91 23

Yesterdays key economic events (GMT) 07:30 Sweden CPI 07:30 Sweden CPIF US 12:30 Initial claims U economic events (GMT) Todays key 09:00 EMU Industrial production 12:30 US Producer prices core 13:55 US Michigan conf. (exp), flash

As of Jun Jun w27 As of May Jun Jul

Unit y/y % y/y % 1000 Unit m/m % m/m % Index

Prior -0.2 0.7 344 Prior 0.4 1.7 77.8

Poll -0.1 0.9 340 Poll -0.2 1.6 76.0

Actual -0.1 0.9 360 DNB

Morning Report
12.07.2013

3m LIBOR
0.160 0.150 0.140 0.130 0.120 0.110 14-Jun
EUR

28-Jun

0.28 0.28 0.27 0.27 0.26 12-Jul

Oil price & NOK TWI

105
100

FX 0700 USD/JPY EUR/USD EUR/GBP EUR/DKK EUR/SEK EUR/CHF EUR/NOK USD/NOK JPY/NOK SEK/NOK DKK/NOK GBP/NOK CHF/NOK

Last 98.80 1.3086 0.8656 7.4586 8.6826 1.2404 7.8868 6.0298 6.11 90.89 105.82 9.113 6.361

Today 98.89 1.3079 0.8620 7.4578 8.7228 1.2396 7.9270 6.0614 6.13 90.92 106.30 9.198 6.398

Spot rates and forecasts In 1m Oct-13 Jan-14 Jul-14 FX 0700 0.1 98 102 107 110 AUD -0.1 1.30 1.26 1.30 1.32 CAD -0.4 0.85 0.85 0.86 0.87 CHF 0.0 7.45 7.45 7.45 7.45 CZK 0.5 8.55 8.45 8.50 8.60 RUB -0.1 1.24 1.25 1.27 1.30 GBP 0.5 7.80 7.70 7.70 7.70 HKD 0.5 6.00 6.11 5.92 5.83 KWD 0.5 6.12 5.99 5.54 5.30 LTL 0.0 91.2 91.1 90.6 89.5 LVL 0.5 104.7 103.4 103.4 103.4 NZD 0.9 9.18 9.06 8.95 8.85 SEK 0.6 629.03 616.00 606.30 592.31 SGD

USD NOK 0.918 5.561 1.036 5.847 0.948 639.316 19.854 30.521 32.625 18.573 1.517 9.194 7.757 0.781 0.286 21.214 2.640 2.295 0.537 11.278 0.787 4.768 6.668 90.872 1.262 4.803

14-Jun

28-Jun

95 12-Jul
USD/b (rha)

NOK TWI

US dollar 6.4 6.2 6.0 5.8 5.6 5.4

1.35 1.33 1.31 1.29 1.27 1.25 12-Jul

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

Prior 1.57 1.64 1.75 1.91 2.12 2.58 2.94 3.28

Last 1.59 1.66 1.74 1.92 2.14 2.58 2.95 3.28

Interest rates SEK Prior Last USD 1m 1.10 1.10 1m 3m 1.19 1.19 3m 6m 1.27 1.27 6m 12m Invalid Invalid RIC(s): RIC. STISEK1YDFI= 12m 3y 1.63 1.63 3y 5y 2.05 2.05 5y 7y 2.35 2.35 7y 10y 2.62 2.62 10y

Prior 0.19 0.27 0.41 0.69 0.85 1.65 2.30 2.87

Last 0.19 0.27 0.40 0.69 0.79 1.55 2.16 2.77

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

Prior 0.07 0.14 0.24 0.45 0.67 1.12 1.50 1.96

Last 0.07 0.14 0.25 0.45 0.68 1.11 1.49 1.94 Last 99.09 1.60 -0.95 10y sw ap 1.75 1.75 2.00

105.0 100.0
95.0

Japanese yen

90.0 14-Jun
USDJ PY

28-Jun

7.0 6.5 6.0 5.5 5.0 12-Jul

Norw ay Prior NST475 94.60 10y yld 2.63 - US spread 0.06 3m nibor 1.55 1.55 1.55

Norw ay Oct-13 Jan-14 Jul-14

Governm ent bonds Last SEK Prior Last US Prior 94.81 10y 94.06 94.08 10y 92.91 2.60 10y yld 2.15 2.15 10y yld 2.57 0.05 - US spread -0.42 -0.41 30y yld 3.61 Interest rate forecasts 10y 10y Sw eden 3m libor USA 3m libor sw ap sw ap 3.00 3.00 3.25 Oct-13 Jan-14 Jul-14 1.25 1.25 1.25 2.25 2.25 2.50 Oct-13 Jan-14 Jul-14 0.30 0.35 0.35

Last Germany Prior 93.05 10y 99.02 2.55 10y yld 1.61 3.60 - US spread -0.96 10y sw ap 2.25 2.25 2.50 3m euribor 0.20 0.25 0.20

Germany Oct-13 Jan-14 Jul-14

JPYNOK(rha)

SEKNOK & CHFNOK

6.4
6.2

14-Jun

28-Jun

6.0 12-Jul
CHFNOK (rha)

SEKNOK

Equities 15700 15200 14700 14200 13700 14-Jun 28-Jun

500

480 460
440 12-Jul
Os lo (rha)

NOK sov. NST21 NST22 NST23 NST471 NST472 NST475 NST475 NST475 NOK FRA SEP DEC MAR JUN

Miscellaneous Prior Last Change Maturity year rem. NOK-index TWI Prior 1.44 1.44 0 18.12.2013 0.44 Last 96.23 95.81 1.43 1.45 2 19.03.2014 0.68 Oil price: (Ldn,cl) 1m 1.52 1.52 0 18.06.2014 0.93 SPOT 107.86 107.69 1.43 1.41 -2 15.05.2015 1.84 Gold price 11.07.2013 PM 1.73 1.72 -1 19.05.2017 3.85 AM: 1256.0 1285.0 2.62 2.57 -5 24.05.2023 9.87 Equities Today 0700 % last 2.62 2.57 -5 24.05.2023 9.87 Dow Jones 15460.92 1.1% 2.63 2.60 -2 24.05.2023 9.87 Nasdaq C. 3578.30 1.6% 3 mnd 6 mnd NOK NIDR NIBOR FTSE100 6543.41 0.6% 1.69 1.78 1m 1.73 1.59 Eurostoxx50 2681.32 0.8% 1.70 1.80 3m 1.82 1.66 DAX 8158.80 1.1% 1.72 1.83 6m 1.87 1.74 Nikkei 225 14506.25 0.2% 1.77 1.92 12m 1.98 1.92 OSEBX 493.37 1.6% Sources to all tables and graphics: Thomson Reuters, Thomson Datastream and DNB Markets

Morning Report
12.07.2013
IMPORTANT/DISCLAIMER
This note (the Note) must be seen as marketing material and not as an investment recommendation within the meaning of the N orwegian Securities Trading Act of 2007 paragraph 3-10 and the Norwegian Securities Trading Regulation 2007/06/29 no. 876. The Note has been prepared by DNB Markets, a division of DNB Bank ASA, a Norwegian bank organized under the laws of the Kingdom of Norway (the Bank), for information purposes only. The Note shall not be used for any unlawful or unauthorized purposes. The Bank, its affiliates, and any third-party providers, as well as their directors, officers, shareholders, employees or agents (individually, each a DNB Party; collectively, DNB Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Note. DNB Parties are not responsible for any errors or omissions, regardless of the cause, nor for the results obtained from the use of the Note, nor for the security or maintenance of any data input by the user. 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Morning Report
12.07.2013

3m LIBOR
0.160 0.150 0.140 0.130 0.120 0.110 14-Jun
EUR

28-Jun

0.28 0.28 0.27 0.27 0.26 12-Jul

Oil price & NOK TWI

105
100

FX 0700 USD/JPY EUR/USD EUR/GBP EUR/DKK EUR/SEK EUR/CHF EUR/NOK USD/NOK JPY/NOK SEK/NOK DKK/NOK GBP/NOK CHF/NOK

Last 98.80 1.3086 0.8656 7.4586 8.6826 1.2404 7.8868 6.0298 6.11 90.89 105.82 9.113 6.361

Today 98.89 1.3079 0.8620 7.4578 8.7228 1.2396 7.9270 6.0614 6.13 90.92 106.30 9.198 6.398

Spot rates and forecasts In 1m Oct-13 Jan-14 Jul-14 FX 0700 0.1 98 102 107 110 AUD -0.1 1.30 1.26 1.30 1.32 CAD -0.4 0.85 0.85 0.86 0.87 CHF 0.0 7.45 7.45 7.45 7.45 CZK 0.5 8.55 8.45 8.50 8.60 RUB -0.1 1.24 1.25 1.27 1.30 GBP 0.5 7.80 7.70 7.70 7.70 HKD 0.5 6.00 6.11 5.92 5.83 KWD 0.5 6.12 5.99 5.54 5.30 LTL 0.0 91.2 91.1 90.6 89.5 LVL 0.5 104.7 103.4 103.4 103.4 NZD 0.9 9.18 9.06 8.95 8.85 SEK 0.6 629.03 616.00 606.30 592.31 SGD

USD NOK 0.918 5.561 1.036 5.847 0.948 639.316 19.854 30.521 32.625 18.573 1.517 9.194 7.757 0.781 0.286 21.214 2.640 2.295 0.537 11.278 0.787 4.768 6.668 90.872 1.262 4.803

14-Jun

28-Jun

95 12-Jul
USD/b (rha)

NOK TWI

US dollar 6.4 6.2 6.0 5.8 5.6 5.4

1.35 1.33 1.31 1.29 1.27 1.25 12-Jul

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

Prior 1.57 1.64 1.75 1.91 2.12 2.58 2.94 3.28

Last 1.59 1.66 1.74 1.92 2.14 2.58 2.95 3.28

Interest rates SEK Prior Last USD 1m 1.10 1.10 1m 3m 1.19 1.19 3m 6m 1.27 1.27 6m 12m Invalid Invalid RIC(s): RIC. STISEK1YDFI= 12m 3y 1.63 1.63 3y 5y 2.05 2.05 5y 7y 2.35 2.35 7y 10y 2.62 2.62 10y

Prior 0.19 0.27 0.41 0.69 0.85 1.65 2.30 2.87

Last 0.19 0.27 0.40 0.69 0.79 1.55 2.16 2.77

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

Prior 0.07 0.14 0.24 0.45 0.67 1.12 1.50 1.96

Last 0.07 0.14 0.25 0.45 0.68 1.11 1.49 1.94 Last 99.09 1.60 -0.95 10y sw ap 1.75 1.75 2.00

105.0 100.0
95.0

Japanese yen

90.0 14-Jun
USDJ PY

28-Jun

7.0 6.5 6.0 5.5 5.0 12-Jul

Norw ay Prior NST475 94.60 10y yld 2.63 - US spread 0.06 3m nibor 1.55 1.55 1.55

Norw ay Oct-13 Jan-14 Jul-14

Governm ent bonds Last SEK Prior Last US Prior 94.81 10y 94.06 94.08 10y 92.91 2.60 10y yld 2.15 2.15 10y yld 2.57 0.05 - US spread -0.42 -0.41 30y yld 3.61 Interest rate forecasts 10y 10y Sw eden 3m libor USA 3m libor sw ap sw ap 3.00 3.00 3.25 Oct-13 Jan-14 Jul-14 1.25 1.25 1.25 2.25 2.25 2.50 Oct-13 Jan-14 Jul-14 0.30 0.35 0.35

Last Germany Prior 93.05 10y 99.02 2.55 10y yld 1.61 3.60 - US spread -0.96 10y sw ap 2.25 2.25 2.50 3m euribor 0.20 0.25 0.20

Germany Oct-13 Jan-14 Jul-14

JPYNOK(rha)

SEKNOK & CHFNOK

6.4
6.2

14-Jun

28-Jun

6.0 12-Jul
CHFNOK (rha)

SEKNOK

Equities 15700 15200 14700 14200 13700 14-Jun 28-Jun

500

480 460
440 12-Jul
Os lo (rha)

NOK sov. NST21 NST22 NST23 NST471 NST472 NST475 NST475 NST475 NOK FRA SEP DEC MAR JUN

Miscellaneous Prior Last Change Maturity year rem. NOK-index TWI Prior 1.44 1.44 0 18.12.2013 0.44 Last 96.23 95.81 1.43 1.45 2 19.03.2014 0.68 Oil price: (Ldn,cl) 1m 1.52 1.52 0 18.06.2014 0.93 SPOT 107.86 107.69 1.43 1.41 -2 15.05.2015 1.84 Gold price 11.07.2013 PM 1.73 1.72 -1 19.05.2017 3.85 AM: 1256.0 1285.0 2.62 2.57 -5 24.05.2023 9.87 Equities Today 0700 % last 2.62 2.57 -5 24.05.2023 9.87 Dow Jones 15460.92 1.1% 2.63 2.60 -2 24.05.2023 9.87 Nasdaq C. 3578.30 1.6% 3 mnd 6 mnd NOK NIDR NIBOR FTSE100 6543.41 0.6% 1.69 1.78 1m 1.73 1.59 Eurostoxx50 2681.32 0.8% 1.70 1.80 3m 1.82 1.66 DAX 8158.80 1.1% 1.72 1.83 6m 1.87 1.74 Nikkei 225 14506.25 0.2% 1.77 1.92 12m 1.98 1.92 OSEBX 493.37 1.6% Sources to all tables and graphics: Thomson Reuters, Thomson Datastream and DNB Markets