Morning Report

23.01.2012

Weaker Euro
NOK & 3m NIBOR 8.00 7.80 7.60 7.40
3m ra.

3.20 2.90 2.60 2.30

Lack of an agreement between Greece and private bond investors weighed the euro. In the United States there are increasingly positive numbers for the economy have been released and Friday's GDP figures are expected to show a rise in growth. More summits in Europe and the FOMC meeting in the United States characterize this week's calendar. Friday was a somewhat mixed picture for U.S. shares. While the DJIA rose by 0.76 per cent, the S&P500 was up barely 0.1 per cent and technology shares on the Nasdaq fell marginally. During the week, however, all three major indexes were up 2 to 2.8 per cent. In fixed income markets in the U.S. long-term yields rose slightly and 10-year Treasury closed at 2.03 per cent. The increase was associated with improved sentiment in Europe, the prospect of an agreement between Greece and private investors and increased borrowing from the U.S. government this week. Over the weekend, it nevertheless became clear that no agreement on reduction of the Greek debt was reached, despite the messages Friday that a deal was in place. This morning Japanese stock markets are somewhat hampered by the lack of a Greek agreement as well as New Year celebrations in several Asian countries. In the currency markets the euro has depreciated about 0.5 per cent against the dollar since Friday morning. Against the British pound the Euro has weakening nearly 1 per cent. The rise in GBP may be due to retail sales figures that rose 0.74 per cent from November to December. This was as expected by analysts, but there are now signs that the trade is about to pick up. The Norwegian and Swedish kroner are respectively 0.1 and 0.2 percent weaker against the euro over the same period. EURNOK still trades below 7.70. This week there are several important meetings. Today finance ministers meet in Brussels. They will continue to work with the new budget rules. Key questions that need to be clarified are how violations should be handled and how countries can create a firewall to protect countries with high debt. Probably, also the size of the rescue fund EFSF / ESM will be on the agenda. This meeting will be important for the next week's EU summit that starts Sunday this week. Before the EU summit the negotiations on the restructuring of the Greek debt to private bondholders must be completed. It appears that Greece and its private creditors are converging on a deal in which private bondholders would take a real loss of 65 to 70 percent on their Greek bonds. But some details of the debt restructuring, which will involve swapping existing Greek bonds for new, longer-term bonds to bring Greek debt down are unresolved. 20 March 14.4 billions Euros are falling due. Also today, Merkel, Barroso and Rompuy meet to prepare for the EU summit. Wednesday the World Economic Forum with around 2,600 representatives from business and politics meet in Davos. Angela Merkel holds the opening speech. In the U.S. this week's monetary policy meeting of the FOMC stands high on the list of events. The meeting is a two-day meeting with press conference Wednesday afternoon. Based on the decisions of previous meeting it is expected that the committee will present forecasts for the key policy rate. Probably not an official rate path from the FOMC but rather a path averaging the members forecasts with paths for lowest and highest forecasts. Also this week the U.S. stock market will focus on company profit reports this week, including reports from Apple and Ford. Friday U.S. fourth quarter GDP figures will be released. It is expected an increase in growth from 1.8 per cent in the third quarter to 3 per cent in the fourth quarter. Last Friday December U.S. existing home sales were reported. In December, it were sold 5 per cent more homes than the previous months. It was more than expected and the highest turnover since May 2010. The level of the number of unsold homes fell to its lowest level since April 2006. U.S. housing market is still weak, but a growing number of indicators, including sales of existing homes, is now pointing in the direction of improvement. [email protected] Yesterday's key economic events (GMT) 09:30 UK Retail sales 15:00 USA Existing home sales As of Dec Dec Unit m/m% mill Prior -0.4 4.42 Prior 94.0 Poll 0.6 4.55 Poll 95.0 Actual 0.6 4.61 DNB

13-Dec 2-J an 20-J an

SEK & 3m STIBOR 9.3 9.1 8.9 8.7 13-Dec 2-Jan

2.80 2.70 2.60 2.50 2.40 20-J an

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

55 21 95 80 75 55 87 60 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 Maren Romstad Camilla Viland Kyrre Aamdal

22 01 76 56 22 01 78 03 22 01 78 24 22 01 76 63 22 01 76 64 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

As of Unit Todays key economic events (GMT) Chine Markets closed 07:45 France INSEE sentiment Jan Index 17:00 EMU Eurogroup Finance Minister meeting

Morning Report
23.01.2012

SPOT RATES AND FORECASTS

NOK TWI ra.

EUR vs GBP & CHF 0.85 0.84 1.20 0.83 1.15 0.82 1.10 0.81 13-Dec 2-Jan 20-Jan 1.25
GBP r.a CHF

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

Prior 76.97 1.294 0.831 1.209 7.673 8.781 7.436 5.937 7.716 0.875 9.256 6.789 8.823 1.144 10.573

Last 77.08 1.292 0.831 1.209 7.672 8.772 7.436 5.945 7.714 0.876 9.241 6.795 8.824 1.144 10.564

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

In 1 m ...3 m 77 77 1.25 1.20 0.82 0.80 1.23 1.23 7.80 7.80 9.10 9.20 7.45 7.45 6.24 6.50 8.10 8.44 0.86 0.85 9.5 9.8 7.28 7.67 5.61 5.90 1.17 1.18 11.10 11.50

...6 m ...12 m 77 85 1.20 1.35 0.80 0.85 1.23 1.30 7.65 7.65 9.00 9.00 7.45 7.45 6.38 5.67 8.28 6.67 0.85 0.85 9.6 9.0 7.50 6.67 5.78 5.67 1.18 1.18 11.25 10.59

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

USD 1.0507 1.0125 0.9358 19.70 5.7581 1.5543 7.7610 124.26 0.2790 2.6739 0.5419 0.8089 3.3343 1.2703 31.3335

% 0.19% -0.06% 0.17% 0.09% 0.14% -0.19% 0.01% 0.12% -0.09% 0.15% 0.17% 0.31% -0.05% -0.10% -0.12%

EURSEK & OMXS 9.2 9.1 9.0 8.9 8.8 13-Dec 500 450 400 2-Jan 350 20-Jan

OMXS ra. EURSEK

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

N IBOR Prior 2.27 2.65 2.92 3.13 2.72 3.02 3.28 3.53

SWAP AN D MON EYM ARKET RATES STIBOR EURIBOR Last Prior Last Prior 2.30 2.33 2.33 0.73 2.65 2.60 2.60 1.14 2.93 2.67 2.67 1.43 3.12 2.72 2.72 1.62 2.72 1.90 1.89 1.29 3.02 2.05 2.04 1.68 3.28 2.24 2.22 2.04 3.52 2.38 2.37 2.39

Last 0.72 1.13 1.43 1.62 1.29 1.67 2.03 2.38

USD LIBOR Prior 0.28 0.56 0.79 0.95 0.73 1.21 1.68 2.14

Last 0.28 0.56 0.79 0.95 0.73 1.19 1.66 2.13

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 116.62 112.80 2.22 0.31 2.21 0.30

GOVERNM ENT BON DS SWEDEN GERMANY Prior Last Prior Last 116.316 116.32 100.662 100.79 1.77 -0.14 1.76 -0.15 1.91 1.91

US Prior 99.78125 2.02 0.12

Last 99.97 2.01 0.10

13-Dec 2-Jan 20-Jan

13 12 11

JPY and DowJones

10 13-Dec

2-Jan

79 78 77 76 75 20-Jan

In 3m 6m 12m

INTEREST RATE FORECASTS N ORWAY SWEDEN GERMANY 3m nibor 10y swap 3m stibor 10y swap 3m euribor 10y swap 2.40 3.50 2.15 2.25 1.05 2.50 2.30 3.75 1.95 2.50 0.90 2.75 2.30 4.25 1.75 3.00 0.90 3.25

US 3m libor 10y 0.55 0.55 0.50

swap 2.25 2.50 3.00

USDJPY ra. DowJones, 1000

USD and gold 1900 1800 1700 1600 1500

1.42 1.38 1.34 1.30 1.26

13-Dec 2-Jan 20-Jan

FRA NOK MAR JUN SEP DEC FRA SEK MAR JUN SEP DEC

3m 2.55 2.30 2.23 2.25 3m 2.32 1.98 1.73 1.65

Prior 2.55 2.30 2.23 2.25 Prior 2.32 1.99 1.73 1.65

chg 0.00 0.00 0.00 0.00 chg 0.00 -0.01 0.00 0.00

MISCELLANEOUS TWI Today % Stock ex. Today % NOK 95.95 - 0.16 Dow Jones 12,720.5 0.8% SEK 116.28 - 0.03 Nasdaq 2,786.7 -0.1% EUR 101.82 - 0.05 FTSE100 5,728.6 -0.2% USD 80.25 0.12 Eurostoxx50 2,427.0 -0.3% GBP 81.10 0.1 Dax 6,404.4 -0.2% Comm. Today Last Nikkei225 8,765.9 0.0% Brent spot 109.0 109.0 Oslo 396.19 -0.6% Brent 1m 109.7 109.9 Stockholm 475.53 -0.3% -0.8% Spot gold 1653.0 1653.0 Copenhagen 525.60 Sources to all tables and graphics: Reuters and DNB Markets

Morning Report
23.01.2012
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