Morning Report

30.03.2012

Euro meeting today

2.80 2.60 2.40 2.20

Euro zone finance ministers meet to agree on how to increase the lending capacity of their the emergency facilities today. The Spanish government will present a highly unpopular budget against a backdrop of general strike and increased borrowing costs. Risk appetite is on a downward trend towards the end of Q1. With the exception of the Dow Jones international stock markets fell yesterday, while yields on ten-year government bonds in "safe havens" continued to edge down. The opposite movement occurred in the secondary market for Italian and Spanish government bonds. Despite a successful auction of 5 - and 10-year government debt earlier in the day Italian 10-year yields rose by 14 basis points from the day before, to 5.36 per cent. The Spanish yields have risen by 10 basis points to 5.6 per cent. In FX markets the yen has strengthened on its status as a safe haven. The euro zone sentiment index (ESI) supports our view that the area is currently experiencing another recession. The index unexpectedly pulled down in March, due to more pessimistic firms within manufacturing and construction. Consumers and businesses in the retail and service sectors became slightly less pessimistic. Meanwhile the great differences within Europe remain striking. German unemployment fell for the sixth consecutive month in March. 6.7 percent is another record-low since the reunification. The market mood soured further when last weeks initial claims exceeded expectations, and the numbers from the week before were revised up. The higher-than-expected level was due to a change in the seasonal adjustment method, however, so the downward trend remains intact. Investors are now waiting for Sunday's important Chinese PMI indices. Today a two-day meeting between European finance ministers begin. They will agree on how their lending capacity should be increased. A probable outcome is that EFSF (the temporary facility) will be extended until mid-2013, in parallel with the launch of ESM (the permanent facility) in July this year. EFSFs remaining capacity (200 billion euros) will then be transferred to the ESM, which will have a capacity of 500 billion. It will, most likely, take three years before ESMs lending capacity is in place. Today, the Spanish budget is presented, and the new Prime Minister Rajoy has announced tough measures. His goal is to get the budget deficit down to 5.3 percent this year, which means cuts of more than 35 billion euros. Spanish workers were on a general strike yesterday, protesting against labour market reforms that will make it easier to dismiss workers and loosen the collective wage bargaining. After strong consumer and business confidence figures on Wednesday, yesterday's Swedish retail trade rose by 1.2 per cent m/m in February, significantly stronger than expected (consensus was 0.1 per cent, according to Reuters). This could signal a stronger spending momentum, after two weak months, and strengthens our belief that the Riksbank will stay on hold rather than cutting the repo rate further throughout 2012. Released just now: The Norwegian manufacturing PMI rose unexpectedly, to a level of 59.7. The level is far above most other industrial countries, and underlines the strong boost from record-high oil investments this year. This also explains why Norwegian registered unemployment declined further in March, and is currently at 2.6 per cent. The number of vacancies has increased, while the supply of new job seekers has declined. Today we get seasonally adjusted retail sales figures both for January and for February. Statistics Norway chose not to release the January numbers one month ago, because they suspected flaws in the seasonal adjustment method. Although we (and consensus) expect February sales to decline, we expect that the two months overall will show a pick-up in consumption due to stronger consumer confidence. We expect Norges Bank to increase its daily FX purchases in April, due to a stronger inflow of tax income from the oil sector than anticipated. kjersti.haugland@dnb.no

20-Feb 9-Mar 29-Mar

SEK & 3m STIBOR 9.0 8.9 8.8 8.7 20-Feb 9-Mar

2.40 2.20 2.00 29-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

Yesterdays key economic events (GMT) 07:00 Sweden Retail sales 08:00 Norway Reg. unemployment 08:00 EMU Sentiment index 12:30 USA Initial claims Todays key economic events (GMT) 08:00 Norway Retails sales 08:00 Norway FX purchase 08:00 EMU CPI, flash 12:30 USA Private consumption

As of Feb Mar Mar w11 As of Mar Apr Mar Feb

Unit % m/m % index 1000 Unit m/m % mill. /day y/y % m/m %

Prior 0.2 2.7 94.5 364 Prior na 350 2.7 0.2

Poll 0.1 2.6 94.6 350 Poll -0.5 2.5 0.6

Actual 1.2 2.6 94.4 359 DNB -0.5 500

Morning Report
30.03.2012

SPOT RATES AND FORECASTS

96 94 92 90 29-Mar
$/b

EUR vs GBP & CHF 1.22 1.21 1.21 1.20

0.86 0.85 0.84 0.83 0.82

20-Feb 9-Mar 29-Mar

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

Prior 82.44 1.330 0.834 1.206 7.643 8.874 7.438 5.747 6.972 0.863 9.172 6.677 8.093 1.162 10.652

Last 81.96 1.336 0.836 1.205 7.637 8.848 7.438 5.718 6.982 0.864 9.142 6.630 8.087 1.161 10.592

% -0.6% 0.4% 0.2% -0.1% -0.1% -0.3% 0.0% -0.5% 0.1% 0.1% -0.3% -0.7% -0.1% -0.1% -0.6%

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 1.0402 0.9972 0.9022 18.53 5.5693 1.5986 7.7650 126.73 0.2780 2.5853 0.5250 0.8202 3.1087 1.2578 29.3250

% 0.24% 0.02% -0.46% -0.49% -0.41% 0.18% 0.01% -0.30% -0.14% -0.45% -0.38% 0.35% -0.56% -0.05% -0.55%

EURSEK & OMXS 9.0 8.9 8.8 8.7 20-Feb 9-Mar

550 500 450 400 350 29-Mar

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

NIBOR Prior 1.87 2.25 2.60 2.79 2.84 3.14 3.42 3.64

SWAP AND MONEYMARKET RATES STIBOR EURIBOR Last Prior Last Prior 1.86 2.02 2.01 0.36 2.23 2.28 2.28 0.69 2.58 2.50 2.50 1.03 2.77 2.60 2.60 1.22 2.83 2.15 2.17 1.22 3.12 2.33 2.33 1.61 3.38 2.52 2.52 1.96 3.61 2.66 2.66 2.33

Last 0.36 0.69 1.02 1.21 1.23 1.60 1.95 2.31

USD LIBOR Prior Last 0.24 0.24 0.47 0.47 0.74 0.73 0.89 0.88 0.75 0.75 1.26 1.24 1.76 1.74 2.25 2.23

Gov. Bonds, 10y 2.25 2.00 1.75 1.50

3.00 2.50 2.00 1.50

20-Feb 9-Mar 29-Mar

10y 10y yield vs bund

NORWAY Prior Last 114.55 110.67 2.45 2.43 0.64 0.62

GOVERNMENT BONDS SWEDEN GERMANY Prior Last Prior Last 113.734 113.73 101.749 101.67 2.00 1.99 1.81 1.81 0.19 0.18

US Prior 98.59375 2.16 0.35

Last 98.53 2.18 0.37

13.5 13.0 12.5

JPY and DowJones

85 80

12.0 20-Feb

9-Mar

75 29-Mar

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

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

USDJPY ra. DowJones, 1000

USD and gold 1.42 1900 1.38 1800 1.34 1700 1.30 1600 1.26 1500 20-Feb 9-Mar 29-Mar
EURUSD ra. Gold

MISCELLANEOUS FRA NOK 3m Prior chg TWI Today JUN 2.21 2.22 -0.01 NOK 95.48 SEP 2.21 2.23 -0.02 SEK 117.22 0.01 EUR 104.99 DEC 2.28 2.27 MAR 2.36 2.36 0.00 USD 78.81 FRA SEK 3m Prior chg GBP 81.60 JUN 2.11 2.11 0.00 Comm. Today 0.00 Brent spot 124.1 SEP 1.96 1.96 DEC 1.95 1.97 -0.02 Brent 1m 122.8 MAR 1.96 1.97 -0.01 Spot gold 0.0 Sources to all tables and graphics: Reuters and DNB Markets

% Stock ex. Today - 0.16 Dow Jones 13,126.2 - 0.14 Nasdaq 3,105.0 0.11 FTSE100 5,809.0 - 0.37 Eurostoxx50 2,496.7 - 0.0 Dax 6,998.8 Last Nikkei225 10,083.6 124.1 Oslo 426.47 122.4 Stockholm 490.91 573.07 1657.5 Copenhagen

Morning Report
30.03.2012
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