Morning Report

03.04.2012

Strong credit growth for enterprises

2.80 2.60 2.40 2.20

Norwegian companies increase their borrowing, according to the credit indicator and car sales reached a new peak in March. In the U.S. the ISM index rose as expected in March. Today the focus will be on the minutes from the Fed's monetary policy meeting in March. The markets were yesterday characterized by the fact that Easter is approaching and the absence of major events. Japanese yen strengthened against the dollar part in yesterday's trading, while the Swedish crown enough once tended stronger against the euro. EURSEK has now fallen to less than 8.80 - the strongest level of the SEK since the middle of February. Stock markets continued to rise in both Europe and the U.S. yesterday, after an encouraging ISM index, while the Japanese Nikkei has fallen slightly overnight. Norwegian credit growth (C2) rose by 7.0% y/y in February. This was slightly more than expected (6.9%). It was the business sector that drew up the loan growth, with an increase in the annual growth rate form 5.8% in January to 6.4% in February. This was the third consecutive month with a marked rise in credit growth for enterprises. There are probably companies in oil-related activities that contribute most to the growth in borrowing. On the other hand, household credit growth has been remarkably stable at slightly over 7% since the autumn. This is somewhat surprising in light of that house prices have increased significantly during this period. On the other hand, there have been new guidelines from the Financial Services Authority, and households already have high debt, which may have made them a bit more cautious with respect to new loans. Otherwise, car sales reached a new record high in March with first time registrations at 13 051. This was slightly higher than in March last year and the highest level since October 1986! In the United States important ISM index rose in line with expectations, although it was a bit disappointing that the index for new orders fell. In the euro zone PMI indices showed a clear decline from February to March, and is now well below 50. This (which was indicated when the flash estimates) shows that the manufacturing sector in the euro zone is in a recession. The positive up tick in January thus appears to have been very short-lived. In the UK, the CIPS index for manufacturing rose slightly in March after a decline in February. The trend is still positive and the level is the highest in ten months. It appears that the industry will contribute positively to GDP growth in the first quarter. Swedish PMI disappointed in March. After several strong business indicators, a rise to 51.9 was expected. The result was a disappointing 50.2, ie a slight decrease from February. It was a drop in the index for new orders and the same for employment. The only bright spot is the new orders index which rose 1 point. Unemployment in the euro zone was steady at 10.0% through the first half of last year. From July last year, unemployment has risen by 0.1% points every month and has now reached 10.8%. This year it is particularly Spain and Italy have pulled the average upwards, with an increase of 0.3%-points and 0.2% -points per month. Unemployment has now reached 23.6% in Spain, while Greece follows closely behind with 21.0%. Austria and the Netherlands have the lowest unemployment rate, both with less than 5.0%. The large difference in the unemployment levels is in itself a sign that the labor market is not very mobile. Today's news is undoubtedly the minutes from the Fed's monetary policy meeting on 13 March. The press release from the meeting pointed at a stronger economy and especially an improvement of the labor market. After the meeting, Fed governor Bernanke has been out and signalled doubt about whether this improvement will continue. It may therefore be interesting to see what the other members of the FOMC believes about the labor market. Yesterday two of the FOMC members, Pianalto (with voting right this year) and Fisher (without voting right this year), both support to the current policy. Even Fisher, known as a hawk, was not calling for a tightening of policy yet. knut.magnussen@dnb.no Yesterdays key economic events (GMT) 06:30 Sweden PMI 08:00 Norway C2 (credit growth) 14:00 USA ISM Todays key economic events (GMT) 09:00 MU PPI 14:00 USA Industrial orders 14:00 USA FOMC-minutes As of Mar Feb Mar As of Feb Feb Unit Index %, y/y Index Unit y/y % % Prior 50.3 6.9 52.4 Prior 3.7 -1.0 Poll 51.9 6.9 53.5 Poll 1.2 Actual 50.2 7.0 53.4 DNB

22-Feb 13-Mar 2-Apr

SEK & 3m STIBOR 9.0 8.9 8.8 8.7 22-Feb 13-Mar

2.40 2.20 2.00 2-Apr

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

Morning Report
03.04.2012

SPOT RATES AND FORECASTS

NOK TWI ra.

EUR vs GBP & CHF 0.86 0.85 1.21 0.84 1.21 0.83 1.20 0.82 22-Feb 13-Mar 2-Apr 1.22
GBP r.a CHF

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

Prior 82.10 1.332 0.832 1.204 7.569 8.806 7.440 5.684 6.924 0.861 9.114 6.608 8.055 1.164 10.591

Last 82.01 1.335 0.833 1.204 7.559 8.797 7.440 5.667 6.915 0.860 9.084 6.592 8.044 1.165 10.571

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

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 1.0400 0.9900 0.9027 18.55 5.5764 1.6032 7.7653 126.58 0.2780 2.5883 0.5254 0.8238 3.1057 1.2516 29.2970

% -0.17% -0.10% -0.12% -0.36% -0.19% 0.03% -0.01% -0.11% 0.05% -0.23% -0.15% -0.05% -0.07% -0.15% -0.01%

EURSEK & OMXS 9.0 8.9 8.8 8.7 22-Feb 13-Mar 550 500 450 400 350 2-Apr

OMXS ra. EURSEK

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

NIBOR Prior 1.91 2.28 2.62 2.81 2.91 3.19 3.42 3.64

SWAP AND MONEYMARKET RATES STIBOR EURIBOR Last Prior Last Prior 1.94 2.00 1.99 0.36 2.31 2.27 2.26 0.68 2.66 2.50 2.49 1.02 2.84 2.59 2.59 1.20 2.93 2.23 2.23 1.21 3.19 2.39 2.39 1.58 3.42 2.55 2.55 1.93 3.64 2.68 2.68 2.30

Last 0.36 0.68 1.01 1.20 1.23 1.59 1.94 2.31

USD LIBOR Prior Last 0.24 0.24 0.47 0.47 0.73 0.73 0.88 0.89 0.76 0.76 1.26 1.26 1.76 1.76 2.26 2.26

Gov. Bonds, 10y 2.25 2.00 1.75 1.50

3.00 2.50 2.00 1.50

22-Feb 13-Mar 2-Apr

10y 10y yield vs bund

NORWAY Prior Last 114.51 110.60 2.46 2.44 0.64 0.62

GOVERNMENT BONDS SWEDEN GERMANY Prior Last Prior Last 113.698 113.71 101.76 101.64 2.00 2.00 1.81 1.81 0.19 0.18

US Prior 98.40625 2.18 0.37

Last 98.34 2.20 0.39

13.5 13.0 12.5

JPY and DowJones

85 80

12.0 22-Feb 13-Mar

75 2-Apr

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 0.50 0.50 0.50

swap 2.50 2.50 3.00

USDJPY ra. DowJones, 1000

USD and gold 1900 1.42 1800 1.38 1700 1.34 1600 1.30 1500 1.26 22-Feb 13-Mar 2-Apr
EURUSD ra. Gold

MISCELLANEOUS FRA NOK 3m Prior chg TWI Today JUN 2.25 2.25 0.00 NOK 94.56 SEP 2.27 2.27 0.00 SEK 116.56 DEC 2.35 2.35 0.00 EUR 104.76 MAR 2.44 2.44 0.00 USD 78.77 FRA SEK 3m Prior chg GBP 82.00 JUN 2.14 2.14 0.00 Comm. Today SEP 2.03 2.03 -0.01 Brent spot 125.3 DEC 2.04 2.04 0.00 Brent 1m 125.0 MAR 2.06 2.06 0.00 Spot gold 0.0 Sources to all tables and graphics: Reuters and DNB Markets

% Stock ex. Today - 0.12 Dow Jones 13,264.5 - 0.06 Nasdaq 3,119.7 0.08 FTSE100 5,874.9 - 0.13 Eurostoxx50 2,501.2 Dax 7,056.7 Last Nikkei225 10,050.4 125.3 Oslo 430.93 125.4 Stockholm 505.33 599.96 1677.5 Copenhagen

Morning Report
03.04.2012
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