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    Weak Macro Figures Intensify Pressure: Morning Report

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    - Weak macroeconomic figures from Europe indicate the region may have slipped back into recession, intensifying pressure on Eurozone leaders to find a solution to the debt crisis. - Recent data on manufacturing and service sector activity were weaker than expected, pointing to stagnant or declining growth across the Eurozone economy in the third quarter. - Financial markets have risen in recent days on hopes that Eurozone leaders will agree on a substantial plan to resolve the sovereign debt crisis at an upcoming meeting, but there is uncertainty about whether any measures will be sufficient to calm markets in the long run.

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    Weak Macro Figures Intensify Pressure: Morning Report

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    - Weak macroeconomic figures from Europe indicate the region may have slipped back into recession, intensifying pressure on Eurozone leaders to find a solution to the debt crisis. - Recent data on manufacturing and service sector activity were weaker than expected, pointing to stagnant or declining growth across the Eurozone economy in the third quarter. - Financial markets have risen in recent days on hopes that Eurozone leaders will agree on a substantial plan to resolve the sovereign debt crisis at an upcoming meeting, but there is uncertainty about whether any measures will be sufficient to calm markets in the long run.

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    MRE111025

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    - Weak macroeconomic figures from Europe indicate the region may have slipped back into recession, intensifying pressure on Eurozone leaders to find a solution to the debt crisis. - Recent data on manufacturing and service sector activity were weaker than expected, pointing to stagnant or declining growth across the Eurozone economy in the third quarter. - Financial markets have risen in recent days on hopes that Eurozone leaders will agree on a substantial plan to resolve the sovereign debt crisis at an upcoming meeting, but there is uncertainty about whether any measures will be sufficient to calm markets in the long run.

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    29 views3 pages

    Weak Macro Figures Intensify Pressure: Morning Report

    Uploaded by

    naudaslietas_lv
    - Weak macroeconomic figures from Europe indicate the region may have slipped back into recession, intensifying pressure on Eurozone leaders to find a solution to the debt crisis. - Recent data on manufacturing and service sector activity were weaker than expected, pointing to stagnant or declining growth across the Eurozone economy in the third quarter. - Financial markets have risen in recent days on hopes that Eurozone leaders will agree on a substantial plan to resolve the sovereign debt crisis at an upcoming meeting, but there is uncertainty about whether any measures will be sufficient to calm markets in the long run.

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    Morning report

    Weak macro figures intensify pressure


    25-Oct-2011
    Weak macro figures from Europe indicate that the economy may have slipped back into recession and the pressure on Euro leaders intensifies. Financial markets dont seem too concerned at the moment, but during the last three years investors have been disappointed by large-scale rescue packages. In the current situation where the debt crisis in Europe is the dominant driver in financial markets macro numbers receive less attention than usual. But yesterday's figures from the Euro zone confirm the downward trend observed lately and emphasize the urgency of a solution to prevent a complete collapse in Europe. PMI indices, which were published yesterday, were weaker than expected, pointing towards a decline in production, both in manufacturing and in the service sector. The manufacturing sector is most affected and the reports show a clear majority experiencing lower production rates. The broad index points to zero growth for the euro zone in the third quarter. And the outlook is even worse if the levels in October persist throughout the year. In this case, it may appear as the Euro area has slipped back into recession. Furthermore, the Euro zone index is now weaker than the US and UK equivalent. Although the pressure on Euro leaders intensifies financial markets dont seem too concerned at the moment. Stock markets rose from opening yesterday. The postponement of what we hope is the final resolution of sovereign debt crisis actually lifted financial markets from start on Monday and the common European currency strengthened against the dollar. Signs of optimism were probably due to increased hopes of a solution on Wednesday after several signals on agreement during the weekend. In the US record results from Caterpillar drove stocks higher. However, Treasury rates slipped somewhat, and some may believe that Euro leaders will fail to agree on a solution tomorrow. Many signals indicate that Europe is near a plan to solve the debt crisis, but there are still some fears of apparent shortcomings and even worse a collapse. We are reasonable confident that Greek debt will be written down significantly, that banks will be recapitalized, that the stability fund will be scaled up and that the pressure on Italy will intensify. The question is whether this will be enough. For several weeks expectations have built up and its far from certain that Euro leaders will be able to deliver large enough measures to calm financial markets. Over the past three years we have often experienced that financial markets are ahead of politicians and often have been disappointed by large-scale rescue packaged. Lets hope this time is different. There have been relatively small fluctuations in the currency market since yesterdays report, but the Norwegian krone has strengthened on a broad basis. Higher equities and oil prices may have been important drivers. Furthermore, the Japanese financial minster is once again warning that the strong yen may trigger currency interventions from Japanese authorities. Market participants dont seem too concerned and the yen have traded sideways against the US dollar. Today several numbers of importance to the American consumer, including consumer confidence for October and house prices for August, are being published. Households make up over 70 per cent of total demand in the US economy, and today's figures are important to consumer developments going forward. Consumer Confidence in US is still at very low levels and is among the indicators that dont have picked up significantly after the financial crisis. This month there are some factors indicating that the index could rise. Equity markets have risen quite sharply and gasoline prices have declined quite significantly. Consensus is expecting an increase from 45.4 to 46.0. House prices are also expected to rise, according to Consensus, which also is positive for the American consumer. In the US wealth effects from housing prices are generally stronger than elsewhere, due to the structural features of the US housing market. maren.romstad@dnbnor.no Yesterday's key economic events (GMT) 07:28 Germany PMI total 07:58 EMU PMI total 09:00 EMU Ind. orders Todays key economic events (GMT) 05:45 Norway Speech by ystein Olsen 13:00 US Case Shiller 14:00 US CB Consumer confidence 14:00 US Housing prices (FHFA) As of Oct Oct Aug As of Aug Oct Aug Unit Index Index m/m % Unit m/m % Index m/m % Prior 50.8 49.1 -2.1 Prior 0.0 45.4 0.8 Actual 51.8 48.7 47.3 0.2 1.9 Poll DnB NOR Poll

    NOK & 3m NIBOR


    8.00 7.80 7.60 7.40 14-Sep 4-Oct 3m ra. 3.20 3.10 3.00 2.90 24-Oct EURNOK

    SEK & 3m STIBOR


    9.4 9.3 9.2 9.1 9.0 8.9 14-Sep 4-Oct 3m ra.
    Headquarters 0021 Oslo Stranden 21 Offices Abroad New York London Shanghai Singapore Stockholm Sales Oslo (+47) Equity Fixed Income FX/IR Regional sales (+47) Bergen Bod Fredrikstad Hamar Haugesund Lillehammer Kristiansand Oslo Stavanger Troms Trondheim Tnsberg lesund +47 03000

    2.55 2.50 2.45 24-Oct EURSEK

    +1 212 681 3800 +44 207 6211111 +86 21 6132 2888 +65 6220 6144 +46 8 4734850 22 94 89 40 22 01 78 20 22 01 76 50 55 75 69 61 52 61 38 22 51 77 73 33 73 21 55 39 05 72 27 07 01 84 62 58 37 84 95 87 41 14 09 32 28 76 04 96 74 13 60 80 60 50 69 06 27 62 50 30 80 89 00 09

    Research Regional Sales (+47) Eirik Larsen 22 01 76 55 Research FX/IR (+47) ystein Drum Kjersti Haugland Ole Andr Kjennerud Knut A. Magnussen Maren Romstad Camilla Viland Kyrre Aamdal Credit Research (+47) Ole Einar Stokstad Mikael L. Gjerding se Haagensen Rolv Kristian Heitmann Thomas Larsen Knut Olav Rnningen 22 22 22 22 22 22 22 22 22 22 22 22 22 01 01 01 01 01 01 01 01 01 01 01 01 01 76 78 78 76 76 77 76 78 77 76 76 77 78 56 03 24 63 64 41 67 37 62 93 77 36 15

    46.0

    25-Oct-2011

    Morning report

    Oil spot & NOK TWI


    120 115 110 105 100 14-Sep 4-Oct NOK TWI ra. 96 94 24-Oct $/b 100 98

    SPOT RATES AND FORECASTS (Source: Reuters and DnB NOR Markets)
    FX USDJPY EURUSD EURGBP EURCHF EURNOK EURSEK EURDKK USDNOK JPYNOK SEKNOK GBPNOK USDSEK JPYSEK NOKSEK GBPSEK Prior 76.12 1.393 0.871 1.227 7.698 9.117 7.446 5.529 7.266 0.846 8.839 6.549 8.620 1.185 10.471 Last 76.10 1.392 0.871 1.227 7.691 9.116 7.446 5.526 7.267 0.844 8.834 6.549 8.612 1.185 10.472 % 0.0% -0.1% 0.0% 0.0% -0.1% 0.0% 0.0% 0.0% 0.0% -0.2% -0.1% 0.0% -0.1% 0.0% 0.0% In 1 m ...3 m 80 80 1.40 1.35 0.88 0.86 1.23 1.23 7.80 7.80 9.20 9.10 7.45 7.45 5.57 5.78 6.96 7.22 0.85 0.86 8.9 9.1 6.57 6.74 5.26 5.39 1.18 1.17 10.45 10.58 ...6 m ...12 m 80 90 1.30 1.25 0.84 0.82 1.23 1.25 7.70 7.70 9.00 9.00 7.45 7.45 5.92 6.16 7.40 6.84 0.86 0.86 9.2 9.4 6.92 7.20 5.54 6.48 1.17 1.17 10.71 10.98 FX AUD CAD CHF CZK DKK GBP HKD ISK KWD LTL LVL NZD PLN SGD RUB USD 1.0470 1.0030 0.8817 17.87 5.3505 1.5989 7.7755 114.46 0.2753 2.4812 0.5069 0.8050 3.1293 1.2628 30.4425 % -0.01% -0.09% 0.06% 0.03% 0.04% -0.03% -0.04% 0.03% 0.01% 0.08% 0.06% -0.36% -0.29% -0.09% -0.37%

    EUR vs GBP & CHF


    1.25 1.20 1.15 1.10 14-Sep 4-Oct GBP r.a 0.89 0.88 0.87 0.86 0.85 24-Oct CHF

    Gov. Bonds, 10y


    2.25 2.00 1.75 1.50 14-Sep 4-Oct NOK, ra. 3.00 2.80 2.60 2.40 2.20 2.00 24-Oct SEK

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

    JPY and DowJones


    13 12 11 10 14-Sep 4-Oct USDJPY ra. DowJones, 1000 78 77 77 76 24-Oct

    SWAP AND MONE YM ARKET RATES (Source: Reuters) NIBOR STIBOR EURIBOR Prior Last Prior Last Prior Las t 2.92 2.91 2.32 2.32 1.31 1.31 3.13 3.15 2.51 2.51 1.52 1.52 3.38 3.39 2.53 2.53 1.73 1.73 3.51 3.53 2.58 2.58 1.89 1.89 3.12 3.13 2.18 2.18 1.78 1.72 3.42 3.42 2.42 2.37 2.12 2.08 3.64 3.63 2.59 2.55 2.37 2.36 3.82 3.82 2.67 2.63 2.65 2.63 GOVE RNMENT BONDS (Source: Reuters) NORWAY SWEDEN GERMANY Prior 114.35 2.52 0.44 Last 110.30 2.52 0.44

    USD LIBOR P rior 0.24 0.42 0.61 0.76 0.83 1.43 1.95 2.41 US

    Last 0.24 0.42 0.61 0.76 0.84 1.44 1.95 2.41

    10y 10y yield vs bund

    2000 1900 1800 1700 1600 1500 14-Sep

    USD and gold

    In 3m 6m 12m
    1.40 1.38 1.36 1.34

    NORWAY 3m nibor 10y swap 3.15 4.25 3.15 4.50 3.35 4.50

    Prior Last Prior Las t P rior Last 114.823 114.83 101.191 101.44 99.046875 99.19 1.93 1.94 2.08 2.09 2.23 2.23 -0.15 -0.15 0.15 0.14 INTEREST RATE FORECASTS SWEDEN GERMANY US 3m s tibor 10y swap 3m euribor 10y swap 3m libor 10y swap 2.50 3.00 1.50 3.00 0.45 2.75 2.55 3.25 1.50 3.25 0.35 3.00 2.65 3.25 1.50 3.25 0.35 3.25

    4-Oct

    1.32 24-Oct Gold

    EURUSD ra.

    EURSEK & OMXS


    9.4 9.2 9.0 8.8 14-Sep 4-Oct OMXS ra. 500 450 400 350 24-Oct EURSEK

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

    3m 2.94 2.68 2.55 2.54 3m 2.41 2.08 1.98 1.97

    Prior 2.94 2.68 2.55 2.54 Prior 2.42 2.10 2.03 1.97

    chg 0.00 0.00 0.00 0.00 chg -0.01 -0.02 -0.05 0.00

    TWI NOK SEK EUR USD GBP Comm. Brent spot Brent 1m Spot gold

    Today 96.17 120.19 107.49 76.13 79.80 Today 112.3 111.3 1652.0

    % Stock ex. Today - 0.09 Dow Jones 11,913.6 - 0.10 Nasdaq 2,699.4 0.00 FTSE100 5,548.1 - 0.01 Eurostoxx50 2,369.1 - 0.00 Dax 6,055.3 Last Nikkei225 8,762.3 112.3 Oslo 385.33 111.5 Stockholm 446.24 464.79 1652.0 Copenhagen

    % 0.9% 2.3% 1.1% 1.4% 1.4% 0.0% 2.0% 1.6% 1.4%

    Morning report
    25-Oct-2011
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