Morning Report

22.03.2013

Cyprus scrambles for plan B

In an attempt to prevent chaos, Cypriot politicians are trying to come up with a plan that can provide the 5.8 billion necessary for the aid package from the EU/IMF.

2.8 2.6 2.4 2.2 2.0 1.8

ECB has given Cyprus until Monday raise the necessary funds. After an ordinary council meeting yesterday, the ECB sent out a press release confirming that the current supply of liquidity to Cypriot banks (through ELA) will be maintained until Monday next week. If by then the rescue package by the EU/IMF to ensure banks' solvency is in place, the ECB will pull the plug. At the same time the Cypriot Parliament today will discuss a proposal for a restructuring of the Cypriot banks. While also trying to put 08-Mar in place legislation to impose capital restrictions when banks are scheduled to open on Tuesday, EURNOK 3m(rha) Cypriot authorities are trying to establish a state investment funds or issue bonds, both secured by future revenues from its offshore gas resources in an effort to raise the required 5.8 bln euros required for the assistance from EU/IMF. Another proposal that has long been noted is a nationalization of the Norsk 10y sov. state pension fund. In the morning hours today, Bloomberg reports that Cyprus has not come to an 150 agreement with Russia on an extension of a loan of 2.5 billion euros which was released in December 100 2011. European leaders are cautiously optimistic about what Cypriots get to, but according to the 50 minutes of a conference call yesterday that Reuters had access to, one was preparing for the worst.
08-Mar
rente

22-Feb

0 22-Mar
Diff(bp,rha)

Headquarter Dronning Eufemias gate 30 0191 Oslo Offices Abroad New York London Singapore Stockholm Sales Oslo (+47) Equity Fixed Income Regional Sales (+47) Bergen Bod Fredrikstad Hamar Lillehammer Kristiansand Oslo Stavanger Troms Trondheim Tnsberg lesund Private Clients Research Regional Sales (+47) Eirik Larsen Research FX/IR (+47) ystein Drum Kjersti Haugland Ole Andr Kjennerud Knut A. Magnussen Camilla Viland Magne stnor Kyrre Aamdal Credit Research (+47) Ole Einar Stokstad Martin Brter Mikael L. Gjerding Rolv Kristian Heitmann Thomas Larsen Knut Olav Rnningen Kristina Solbakken Magnus Vie Sundal

+47 03000

+ 1 212 681 2550 +44 207 283 0050 +65 6220 6144 +46 84 73 48 50

Yesterday's flash PMIs from the euro area cannot be said to be anything other than disappointing. The only bright spot is that the French industrial index did not fall, but was unchanged from February to March. The overall PMI index for the euro area fell from 47.9 to 46.6. The decline is due to a decline in both the manufacturing and service indices. Looking at the first quarter as a whole, the index shows a marginal increase from the fourth quarter, but indicates a marginal decline in GDP in Q1. Key figures from the UK has disappointed lately. But retail sales in February surprised positively, and rose 2.1 percent from January after falling for four consecutive months. Growth in retail sales in the first quarter looks set to be positive, indicating a positive contribution of consumption to growth. However, the trend in retail sales is still negative, and the real income of households falls. This suggests limited demand growth going forward. The U.S. data were overall on the positive side yesterday. As the Fed pointed out yesterday, the job market is gradually improving. This was confirmed by the figures for initial claims. Although the number increased by 2' from last week, the trend (4-week average) is steadily declining. House prices continue to rise, according to the Federal Housing Finance Agency (FHFA), and rose by 0.6 percent from December to January. Thus, house prices have risen over the last twelve months. Existing home sales edged up from 4.94 'in January to 4.98 in February, slightly less than expected. The Philly Fed index rose from -12.5 in February to 2.0 in March, and is now close to its long-term average. PMI for manufacturing rose from 54.3 in February to 54.9 in March. Along with the rise in the Empire State index, sentiment indices indicate small changes in the ISM for the industry next week. Despite the fact that Cyprus is still in the middle of the spotlight, the movements in the EURUSD since the sell-off on Sunday, have been limited. Yesterday the euro weakened slightly against most currencies, which positive American and weak European figures pointed to. The Japanese yen strengthened yesterday, apparently after the new governor dampened expectations of an additional interest meeting in Japan. Uncertainty in Cyprus also characterizes stock markets, and European and U.S. stock markets pulled down yesterday. In Asia, equity markets open down today. There are few data on today's calendar. Consumer confidence in France is expected to rise marginally from February to March. Despite a stronger recovery than expected in February, the index is still about one and a half standard deviations below its average, pointing to continued weak growth in industrial production. In Norway, the registered unemployment rate is expected to fall from 2.7 percent in February to 2.6 in February to March. Gross unemployment is expected to rise by 400 people, but will still show a lower increase in the number of unemployed than the LFS figures. The German flash PMI disappointed yesterday, but the IFO index is expected to rise slightly from February to March. Thus IFO still point towards a growth in GDP in Germany of over 2 percent. [email protected]

22 94 89 40 24 16 90 30

56 13 27 20 75 52 99 10 69 39 41 50 62 54 14 82 61 24 79 56 38 14 61 64 24 16 90 80 51 84 04 30 77 62 96 80 73 87 49 73 33 01 73 80 70 11 69 85 24 16 90 90

24 16 90 77

24 16 90 08 24 16 90 03 24 16 90 07 24 16 90 04 24 16 90 01 24 16 90 06 24 16 90 02

24 16 90 48 24 16 90 46 24 16 90 47 24 16 90 49 24 16 90 44 24 16 90 45 24 16 90 51 24 16 91 23

Yesterdays key economic events (GMT) 08:58 EMU Flash-PMI 09:30 UK Retail sales 14:00 USA Existing home sales Todays key economic events (GMT) 10:00 Norway Registered unemployment 10:00 Norway Consumer Confidence 10:00 Germany IFO, expectations

As of Mar Feb Feb As of Mar Mar Mar

Unit Index M/m % Mill Unit % Index Index

Prior 47.9 -0.6 4.9 Prior 2.7 6.7 104.6

Poll 48.1 0.5 5.0 Poll 2.6 106.1

Actual 46.6 2.1 4.98 DNB 2.6

Morning Report
22.03.2013

3m LIBOR
0.15 0.14 0.13 0.12 0.11 22-Feb
EUR

08-Mar

0.29 0.29 0.28 0.28 0.27 22-Mar

NOK & 3m NIBOR 7.60 1.95 1.90 7.50 1.85 7.40 1.80 7.30 1.75 7.20 1.70 22-Feb 08-Mar 22-Mar
EURNOK 3m(rha)

FX 0700 USD/JPY EUR/USD EUR/GBP EUR/DKK EUR/SEK EUR/CHF EUR/NOK USD/NOK JPY/NOK SEK/NOK DKK/NOK GBP/NOK CHF/NOK

Last 95.77 1.2945 0.8565 7.4537 8.3725 1.2234 7.5678 5.8454 6.11 90.43 101.51 8.839 6.190

Today 94.71 1.2902 0.8495 7.4527 8.3735 1.2217 7.5346 5.8425 6.17 90.06 101.16 8.876 6.172

Spot rates and forecasts In 1m Jun-13 Sep-13 Mar-14 FX 0700 -1.1 95 92 95 100 AUD -0.3 1.30 1.32 1.34 1.37 CAD -0.8 0.85 0.85 0.86 0.87 CHF 0.0 7.45 7.45 7.45 7.45 CZK 0.0 8.40 8.40 8.45 8.60 RUB -0.1 1.22 1.22 1.25 1.27 GBP -0.4 7.45 7.40 7.40 7.40 HKD 0.0 5.73 5.61 5.52 5.40 KWD 1.1 6.03 6.09 5.81 5.40 LTL -0.4 88.7 88.1 87.6 86.0 LVL -0.3 100.0 99.3 99.3 99.3 NZD 0.4 8.76 8.71 8.60 8.51 SEK -0.3 610.66 606.56 592.00 582.68 SGD

USD NOK 1.043 6.090 1.025 5.696 0.947 616.688 19.982 29.222 30.945 18.869 1.519 8.869 7.762 0.752 0.285 20.473 2.676 2.182 0.544 10.734 0.832 4.860 6.489 89.986 1.250 4.670

US dollar

6.0 5.8 5.6 5.4 22-Feb

1.35 1.30
08-Mar

1.25 22-Mar
EURUSD(rha)

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

Prior 1.89 1.88 1.95 2.14 2.10 2.44 2.78 3.16

Last 1.83 1.84 1.92 2.15 2.11 2.46 2.79 3.17

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

Prior 1.17 1.24 1.32 #N/A 1.53 1.79 2.05 2.32

Interest rates Last USD 1.17 1m 1.24 3m 1.32 6m #N/A 12m 1.54 3y 1.80 5y 2.06 7y 2.32 10y

Prior 0.20 0.28 0.45 0.74 0.51 0.94 1.43 2.03

Last 0.20 0.28 0.45 0.74 0.52 0.95 1.45 2.03

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

Prior 0.06 0.13 0.23 0.44 0.61 0.92 1.26 1.69

Last 0.06 0.13 0.23 0.44 0.59 0.90 1.24 1.66

USDNOK

Japanese yen

100.0 95.0
90.0

7.0 6.0
08-Mar

Norw ay Prior NST475 97.74 10y yld 2.25 - US spread 0.29 3m nibor 1.85 1.85 1.85

85.0 22-Feb
USDJ PY

5.0 22-Mar
JPYNOK(rha)

Norw ay Jun-13 Sep-13 Mar-14

Governm ent bonds Last SEK Prior Last US Prior 97.87 10y 96.11 96.09 10y 100.33 2.24 10y yld 1.91 1.91 10y yld 1.96 0.33 - US spread -0.05 0.01 30y yld 3.20 Interest rate forecasts 10y 10y Sw eden 3m libor USA 3m libor sw ap sw ap 3.25 3.25 3.50 Jun-13 Sep-13 Mar-14 1.20 1.20 1.20 2.25 2.25 2.50 Jun-13 Sep-13 Mar-14 0.35 0.35 0.35

Last Germany Prior Last 100.86 10y 101.02 101.31 1.90 10y yld 1.39 1.36 3.12 - US spread -0.57 -0.55 10y sw ap 2.00 2.00 2.50 3m euribor 0.25 0.25 0.25 10y sw ap 1.75 1.75 2.00

Germany Jun-13 Sep-13 Mar-14

SEKNOK & CHFNOK 91 90 89 88 87 86 85 84 83 22-Feb 08-Mar

6.3 6.2 6.1 6.0 5.9 22-Mar

Equities 14700 14200 13700 13200 12700 12200 22-Feb 08-Mar

485 480 475 470 465 460 22-Mar

NOK sov. NST20 NST21 NST22 NST471 NST472 NST473 NST475 NST475 NOK FRA JUN SEP DEC MAR

Miscellaneous Prior Last Change Maturity year rem. NOK-index TWI Prior 1.65 1.64 -1 18.09.2013 0.49 Last 92.88 93.14 1.51 1.53 2 18.12.2013 0.74 Oil price: (Ldn,cl) 1m 1.64 1.64 0 19.03.2014 0.99 SPOT 106.59 107.62 1.28 1.26 -2 15.05.2015 2.15 Gold price 21.03.2013 PM 1.49 1.48 -1 19.05.2017 4.16 AM: 1607.5 1613.8 1.72 1.71 -1 22.05.2019 6.17 Equities Today 0700 % last 2.26 2.24 -1 24.05.2023 10.18 Dow Jones 14421.49 -0.6% 2.25 2.24 -1 24.05.2023 10.18 Nasdaq C. 3222.60 -1.0% 3 mnd 6 mnd NOK NIDR NIBOR FTSE100 6388.55 -0.7% 1.81 1.91 1m 1.85 1.83 Eurostoxx50 2683.92 -0.9% 1.79 1.90 3m 1.92 1.84 DAX 7932.51 -0.9% 1.80 1.94 6m 1.98 1.92 Nikkei 225 12338.53 -2.4% 1.83 1.98 12m 2.17 2.15 OSEBX 474.13 -0.4% Sources to all tables and graphics: Thomson Reuters, Thomson Datastream and DNB Markets

Morning Report
22.03.2013
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