Morning Report

13.03.2012

Modest Market Movements

2.90 2.60 2.30

Few important key figures yesterday and market movements were moderate. OECD's leading indicators suggest that the through has passed by. Fed's monetary policy meeting today is expected not to cause any major effect. Since yesterday morning, the euro strengthened 0.6 per cent against the U.S. dollar. The Norwegian krone appreciated slightly with a decline in EURNOK of 0.4 per cent and SEKNOK of -0.5 per cent. In the equity markets main indices were relatively stable in both Europe and the United States, and also in Japan this morning. Long U.S. government bond yields pushed up 1-2 bps, but swap rates fell a few points. In all in all, there were no significant shifts in market sentiment the last day. Yesterday Euro zone finance ministers met in Brussels. The finance ministers gave their final approval to further payments to Greece from the earlier adopted 130bn Euro rescue package. The package provides funding for Greece until 2014. With the recently signed agreement on restructuring of debt to private lenders finance ministers agreed that the goal of a debt ratio for Greece under 120 percent of GDP in 2020 is within reach and forecast a debt level at 117 per cent. Financial markets are more in doubt. According to the agreement on the restructuring of private debt most of the bonds that remained after write offs were swapped to new, long-term bonds. These new bonds are traded in the markets at a price of 25-30 per cent of face value. It can be interpreted as the markets await new round of restructuring of private debt. At the meeting it was also a claim to Spain. After announcing the previous government had missed its 2011 budget deficit target by a significant margin, the new administration said it would not meet the EU-agreed deficit goal for this year either. Spain was supposed to cut its deficit to 4.4 per cent of GDP this year, but said it would only aim for 5.8 per cent as it heads into recession. Its deficit in 2011 was 8.5 per cent, far above a 6.0 per cent goal. EU ministers pointed out that it is important to keep up the pressure on the fiscal policy in order not to undermine confidence in the EU's willingness to address the fiscal challenges. EU ministers said that Spain should therefore strive to bring this year's deficit down to 5.3 per cent. The Spanish government said it would stick to its target of a deficit of 3 per cent in 2013. There were few important figures on the calendar yesterday, but Italy presented figures for GDP growth in the fourth quarter. They showed that GDP fell by 2.6 per cent (annual rate) in the 4th quarter. GDP has thus fallen for two quarters in a row, which is often regarded as a recession. The figures show that the domestic demand is weak due to a decrease in investment and consumption. This lower demand also leads to a decline in imports, while exports held up. Net export thus contributed significant to the Italian GDP in Q4. Also out yesterday were the OECD's leading indicators. The indicators show that the economic picture looks brighter now than the couple of months ago. In particular, the United States and Japan are leading the growth in the OECD area, but stronger, albeit cautious signals are beginning to emerge in all major OECD countries and the euro zone as a whole. Today, the U.S. Federal Reserve' monetary policy meeting would be the most important event. The FOMC is expected to keep its policy course steady with no change to its pledge to hold interest rates near zero until late 2014 or to its efforts to rebalance its portfolio to emphasize longer-term securities. With no news conference scheduled for after todays meeting, or fresh forecasts coming from policymakers, the public will have to wait for speeches next week and minutes of the meeting in three weeks to learn if policymakers are moving further away from launching a third round of bond buying to push interest rates lower. The central bank is likely to acknowledge a strengthening in the jobs market but will probably also note the run-up in energy prices - a mix for a wait-and-see policy stance. The Fed releases a statement after the meeting at 1815 GMT. kyrre.aamdal@dnb.no

1-Feb 21-Feb 12-Mar

SEK & 3m STIBOR 9.0 8.9 8.8 8.7 1-Feb

2.60 2.40 2.20 2.00 21-Feb 12-Mar

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

Yesterday's key economic events (GMT) 09:00 Italy GDP 14:00 Belgium EuroGroup -meeting Todays key economic events (GMT) 08:30 Sweden CPIF 10:00 Germany ZEW-index 12:30 USA Retail sales ex. cars 18:15 USA FOMC-meeting

As of Q4 As of Feb Mar Feb

Unit y/y % Unit y/y % index m/m % %

Prior 0.5 Prior 0.9 5.4 0.7 0.25

Poll 0.5 Poll 1.0 8.3 0.6 0.25

Actual -0.4 DNB 0.7

0.25

Morning Report
13.03.2012

SPOT RATES AND FORECASTS

NOK TWI ra.

1.25 1.20 1.15

EUR vs GBP & CHF 0.87 0.85 0.83

1.10 0.81 1-Feb 21-Feb 12-Mar

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

Prior 82.29 1.316 0.842 1.206 7.473 8.951 7.435 5.679 6.902 0.836 8.882 6.808 8.272 1.200 10.635

Last 82.39 1.317 0.842 1.206 7.460 8.928 7.435 5.666 6.880 0.837 8.864 6.783 8.234 1.197 10.609

% 0.1% 0.1% 0.0% 0.0% -0.2% -0.3% 0.0% -0.2% -0.3% 0.1% -0.2% -0.4% -0.4% -0.2% -0.2%

In 1 m ...3 m 77 77 1.30 1.30 0.83 0.83 1.23 1.23 7.60 7.75 8.90 9.20 7.45 7.45 5.85 5.96 7.59 7.74 0.85 0.84 9.2 9.3 6.85 7.08 5.27 5.45 1.17 1.19 10.72 11.08

...6 m ...12 m 80 85 1.35 1.40 0.85 0.87 1.23 1.30 7.65 7.65 9.00 9.00 7.45 7.45 5.67 5.46 7.08 6.43 0.85 0.85 9.0 8.8 6.67 6.43 5.33 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 1.0542 0.9910 0.9162 18.64 5.6477 1.5648 7.7598 126.71 0.2789 2.6230 0.5295 0.8221 3.1209 1.2576 29.5101

% 0.29% -0.15% -0.07% -0.22% -0.10% 0.04% 0.02% -0.07% 0.01% -0.10% -0.28% 0.48% -0.24% -0.30% -0.24%

EURSEK & OMXS 9.0 8.9 8.8 8.7 1-Feb 550 500 450 400 350 21-Feb 12-Mar
OMXS ra. EURSEK

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

N IBOR Prior 2.18 2.56 2.89 3.09 2.95 3.19 3.41 3.61

SWAP AN D MON EYM ARKET RATES STIBOR EURIBOR Last Prior Last Prior 2.20 1.98 1.99 0.42 2.59 2.29 2.30 0.80 2.92 2.48 2.49 1.16 3.11 2.60 2.61 1.35 2.96 1.91 1.90 1.15 3.20 2.07 2.08 1.51 3.41 2.26 2.27 1.88 3.62 2.42 2.43 2.25

Last 0.41 0.79 1.15 1.34 1.17 1.51 1.88 2.24

USD LIBOR Prior 0.24 0.47 0.74 0.89 0.72 1.16 1.61 2.08

Last 0.24 0.47 0.74 0.89 0.73 1.17 1.63 2.10

Gov. Bonds, 10y 2.00 1.75 1.50

3.00 2.50 2.00 1.50

10y 10y yield vs bund

N ORWAY Prior Last 114.8 111.32 2.38 0.61 2.36 0.59

GOVERNM ENT BON DS SWEDEN GERMANY US Prior Last Prior Last Prior 116.077 116.18 102.177 101.98 99.671875 1.77 0.00 1.76 -0.02 1.77 1.78 2.04 0.27

Last 99.59 2.06 0.28

1-Feb 21-Feb 12-Mar

JPY and DowJones 14 83 82 13 81 80 79 12 78 77 11 76 75 10 1-Feb 21-Feb 12-Mar

In 3m 6m 12m

INTEREST RATE FORECASTS N ORWAY SWEDEN GERMANY 3m nibor 10y swap 3m stibor 10y swap 3m euribor 10y swap 2.65 3.50 2.15 2.25 1.05 2.50 2.55 3.75 2.10 2.50 1.05 2.75 2.60 4.25 2.00 3.00 1.05 3.25

US 3m libor 10y 0.50 0.50 0.50

swap 2.25 2.50 3.00

USD and gold 1900 1800 1700 1600 1500

1.42 1.38 1.34 1.30 1.26

1-Feb 21-Feb 12-Mar

MISCELLANEOUS FRA NOK 3m Prior chg TWI Today % MAR 2.58 2.59 -0.01 NOK 93.28 - 0.14 JUN 2.47 2.48 -0.01 SEK 118.16 - 0.28 SEP 2.46 2.47 -0.01 EUR 104.63 0.05 DEC 2.49 2.50 -0.01 USD 79.80 - 0.08 FRA SEK 3m Prior chg GBP 80.60 - 0.0 MAR 2.27 2.27 0.00 Comm. Today Last JUN 1.95 1.95 0.00 Brent spot 128.9 128.9 SEP 1.74 1.73 0.01 Brent 1m 126.0 125.3 DEC 1.67 1.67 0.00 Spot gold 0.0 1697.5 Sources to all tables and graphics: Reuters and DNB Markets

Stock ex. Today Dow Jones 12,959.7 Nasdaq 2,983.7 FTSE100 5,892.8 Eurostoxx50 2,515.0 Dax 6,901.4 Nikkei225 9,899.1 Oslo 422.43 Stockholm 500.77 Copenhagen 590.57

% 0.3% -0.2% 0.1% 0.0% 0.3% 0.0% -0.8% 0.1% 0.0%

Morning Report
13.03.2012
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