Morning Report

25.04.2012

Increased optimism yesterday

Yesterday's European sovereign debt auctions were well received in the markets. Markets improved slightly yesterday after political events in the Netherlands and France contributed to the reduced risk appetite and stocks plunging worldwide on Monday. The dollar index, which is normally negatively correlated with increased optimism, has fallen by 0.2 percent since yesterday morning, despite the fact that yesterday's US key figures were somewhat weak. Consumer Confidence (CF) fell marginally from March to April, but remain well above levels at the end of 2011. The Case Schiller index and the broader FHFA index which tracks housing prices in the US rose slightly from January to February. January figures for the FHFA index was, however, revised down significantly, indicating that house prices so far this year is lower than at the end of 2011. In addition, new home sales reversed almost the entire increase from January to February, with a fall of 7.1 percent m/m in March. This suggests that we so far in 2012 are left with a sideways development in sales. Despite some disappointment on the macro front, the Dow Jones rose after Apple, which comprises about 4 percent of S&P 500, delivered very good results for the first quarter. The increased optimism which contributed to an increase on European stock exchanges by 1 to 2 percent can be attributed to the results from yesterday's debt auctions in the Netherlands, Italy and Spain. In the Netherlands, the government borrowed 2.0 billion in two year loans, at an interest rate cost of 0.523 percent, which is about 10 basis points higher than yields in the secondary market for similar loans on Monday. In addition the government borrowed 945 million in loans maturing in 2037, at an interest rate of 2.773 percent. The auctions were described as successful by market participants. Prior to the auctions there was a certain fear that the political unrest in the Netherlands, where Prime Minister Mark Rutter dissolved the government after the weekend budget talks broke down, would lead to a negative development in the Netherlands' creditworthiness. The mood in the Netherlands is described as very tense and is directly tied to the debt crisis in the eurozone. The Italian sovereign bonds from yesterday's auction were probably not quite as attractive, but the Italians were still able to retrieve what they had targeted. The government collected 2.5 billion in loans with maturity of 2 year, yielding 3.36 percent, up from 2.35 percent on a similar auction last month. According to Reuters, the bid-to-cover ratio was 1,796, which is slightly lower than the March auction (1.86). Also the Spanish were able to borrow money in the markets. The government borrowed 1.9 billion in 3- and 6-month bonds, and, according to Reuters auctions were oversubscribed 7.6 times, compared to 5.6 in March. Despite this high demand interest rates doubled relative to similar auctions last from last month. Overall, the auctions from the three countries were well received in the markets and the euro strengthened broadly. Long sovereign bond yields in the US and Germany have increased by 5 basis points since yesterday morning and the yen has depreciated against both the dollar and the euro. In other words, the skepticism that characterized Monday's markets was to some extent reversed yesterday. Positive new also from the Swedish economy: Swedish unemployment was slightly lower than expected in March. Unadjusted the unemployment rate fell from 7.8 percent in February to 7.7 percent in March, versus consensus expectations at 8.0 percent (Reuters). Adjusted for seasonal variations unemployment fell from 7.5 percent in February to 7.3 percent in March. Even more positive was the fact that employment rose by 1.7 percent compared with the same month last year. This may indicate that the Swedish economy is back on track, after the euro zone crisis has put a damper on economic development in Sweden since last year. Today a two-day FOMC meeting is concluded. Prior to the announcement it is not expected that the Fed will do anything now, and assessments of the economy will probably not differ much from the March meeting. This time, however, the committee members will present new forecasts for GDP, unemployment, inflation and interest rates. Most likely will expectations for the unemployment rate be adjusted slightly, while the interest rate path is expected unchanged from January. It is also possible that Ben Bernanke will signal future liquidity-enhancing measures at tonight's press conference. This may affect what the Japanese central bank will do later this week, as it is expected that the BOJ will increase their asset purchases with the 5 'to 10' billion yen. ole.kjennerud@dnb.no Yesterdays key economic events (GMT) As of Unit 07:30 Sweden Unemployment (LFS) Mar % na 14:00 USA New Home Sales Mar Mill 14:00 USA Consumer Conf. (CB) Apr Index As of Unit Todays key economic events (GMT) 09:00 Norge Norges Bank's lending survey Q1 2012 15:30 USA FOMC-statements (two-day meeting) % 19:15 USA FOMC press conference with Ben Bernanke Prior 7.8 0.353 79.5 Prior 0-0.25 Poll 8.0 0.320 70.3 Poll 0-0.25 Actual 7.7 0.328 69.2 DNB 0-0.25

SEK & 3m STIBOR 9.0 8.9 8.8 8.7 15-Mar 4-Apr 2.40 2.20 2.00 24-Apr
EURSEK

3m ra.

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 Magne stnor 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 57 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
25.04.2012

SPOT RATES AND FORECASTS

NOK TWI ra.

EUR vs GBP & CHF 1.22 1.21 1.21 0.86 0.84 0.82

1.20 0.80 15-Mar 4-Apr 24-Apr

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

Prior 81.36 1.320 0.818 1.202 7.562 8.890 7.441 5.738 7.048 0.852 9.247 6.738 8.283 1.177 10.879

Last 81.41 1.321 0.818 1.202 7.560 8.894 7.441 5.723 7.038 0.851 9.245 6.734 8.280 1.177 10.874

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

In 1 m ...3 m 83 84 1.30 1.30 0.83 0.83 1.20 1.20 7.50 7.50 8.90 9.00 7.45 7.45 5.77 5.77 6.95 6.87 0.84 0.83 9.0 9.0 6.85 6.92 5.68 5.82 1.19 1.20 10.72 10.84

...6 m ...12 m 85 85 1.35 1.40 0.85 0.87 1.20 1.30 7.50 7.60 9.00 9.00 7.45 7.45 5.56 5.43 6.54 6.39 0.83 0.84 8.8 8.7 6.67 6.43 5.67 5.46 1.20 1.18 10.59 10.34

FX AUD CAD CHF CZK DKK GBP HKD ISK KWD LTL LVL NZD PLN SGD RUB

USD 1.0321 0.9865 0.9098 18.86 5.6333 1.6148 7.7596 126.25 0.2780 2.6142 0.5299 0.8114 3.1780 1.2471 29.3080

% 0.03% -0.10% -0.13% -0.30% -0.11% 0.04% -0.01% -0.07% -0.08% -0.14% -0.08% -0.23% -0.09% 0.06% -0.15%

EURSEK & OMXS 9.0 8.9 8.8 8.7 15-Mar 4-Apr 550 500 450 400 350 24-Apr

OMXS ra. EURSEK

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

NIBOR Prior 1.91 2.30 2.67 2.89 2.95 3.21 3.43 3.65

SWAP AND MONEYMARKET RATES STIBOR EURIBOR Last Prior Last Prior 1.90 1.91 1.90 0.35 2.31 2.18 2.18 0.65 2.69 2.43 2.42 0.98 2.91 2.54 2.54 1.15 2.96 2.06 2.08 1.18 3.22 2.20 2.21 1.54 3.44 2.36 2.38 1.89 3.67 2.51 2.54 2.25

Last 0.35 0.65 0.97 1.15 1.19 1.55 1.90 2.26

USD LIBOR Prior Last 0.24 0.24 0.47 0.47 0.73 0.73 0.89 0.89 0.70 0.71 1.14 1.15 1.61 1.63 2.09 2.11

Gov. Bonds, 10y 2.25 2.00 1.75 1.50

3.00 2.50 2.00 1.50

15-Mar 4-Apr 24-Apr

10y 10y yield vs bund

NORWAY Prior Last 115.75 112.15 2.23 2.25 0.52 0.54

GOVERNMENT BONDS US SWEDEN GERMANY Prior Last Prior Last Prior 115.662 115.55 100.42 100.14 100.23438 1.80 1.80 1.69 1.74 1.97 0.11 0.06 0.28

Last 100.14 1.99 0.26

13.5 13.0 12.5 12.0

JPY and DowJones

85 80 75

In 3m 6m 12m

INTEREST RATE FORECASTS NORWAY SWEDEN GERMANY 3m nibor 10y s wap 3m stibor 10y swap 3m euribor 10y swap 3.50 2.15 2.75 0.80 2.50 2.40 3.75 2.10 2.75 0.80 2.75 2.45 2.70 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

15-Mar

4-Apr

24-Apr

USDJPY ra. DowJones, 1000

USD and gold 1900 1.42 1800 1.38 1700 1.34 1600 1.30 1500 1.26 15-Mar 4-Apr 24-Apr
EURUSD ra. Gold

MISCELLANEOUS FRA NOK 3m Prior chg TWI Today JUN 2.27 2.26 0.01 NOK 94.55 2.28 2.27 0.01 SEK 118.07 SEP DEC 2.37 2.37 0.00 EUR 103.61 MAR 2.46 2.45 0.01 USD 79.15 FRA SEK 3m Prior chg GBP 0.00 JUN 2.12 2.11 0.01 Comm. Today SEP 1.96 1.94 0.02 Brent spot 117.8 DEC 1.92 1.90 0.01 Brent 1m 118.4 MAR 1.91 1.91 0.00 Spot gold 0.0 Sources to all tables and graphics: Reuters and DNB Markets

% Stock ex. Today - 0.12 Dow Jones 13,001.6 - 0.07 Nasdaq 2,961.6 0.07 FTSE100 5,709.5 - 0.04 Eurostoxx50 2,284.1 - 100.0 Dax 6,590.4 Last Nikkei225 9,561.0 117.7 Oslo 416.03 118.2 Stockholm 481.30 1649.5 Copenhagen 597.15

% 0.6% -0.3% 0.8% 1.7% 1.0% 0.0% 1.7% 1.6% 0.2%

Morning Report
25.04.2012
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