Morning Report

19.04.2012

Stronger SEK and GBP

NOK & 3m NIBOR 7.70 2.80 7.60 2.60 7.50 2.40 7.40 2.20 7.30 9-Mar 29-Mar 18-Apr
3m ra. EURNOK

The British pound strengthened and interest rates rose after the minutes of the previous monetary policy meeting was more hawkish than expected. In Sweden, interest rates increased and the krona appreciated after the central bank held the interest rate and interest rate path unchanged. In our updated forecasts, which were presented yesterday, the revisions to the forecasts from January are small. However, we lower growth projections for our Sweden after weak GDP figures for the fourth quarter and mixed signals from the corporate sector in the first quarter. Wage growth in Norway in 2012 is likely to be higher than expected in January. And growth in Norway is still good. Thus, we believe that Norges Bank will raise interest rates by 25 basis points at the meeting in August. We still believe that both the dollar and the Norwegian krone will continue to stay strong for a while. The swedish krona has remained relatively stable since January despite the slightly weaker economic data, and we believe therefore not in a strong decline towards the summer as we did in January. We revise down our forecast for the oil price in 2015 from 150 to 120 dollar on the back of weaker global demand growth for oil and higher production in the United States and Canada. Riksbanken kept the interest rates and interest rate path unchanged at the meeting yesterday. The path still indicates unchanged interest rate until the second quarter of 2013. Not surprisingly, the estimates of GDP growth was revised down slightly, while the outlook for unemployment and inflation was kept unchanged. In advance, the market priced a certain probability of a cut. The short dated FRAs rose by about 10 basis points on the news, while the Swedish krona strengthened by 0.5 percent against the euro. The minutes of the last monetary policy meeting of the Bank of England was interpreted as more hawkish than expected. Bank of England emphasized that inflation is likely to remain above target in the medium term, and that economic activity is starting to pick up. Inflation figures on Tuesday showed that the fall in inflation has stopped. It now looks more likely that the MPC will pause its quantitative easing in May, after only one member voted for an increase in April. BoE increased the purchases of government securities by 50 billion pounds to 325 billion total at the meeting in January. There where few revisions to IMF's perception of market and liquidity risks in the Global Financial Stability Report published yesterday. However, the IMF sees a necessary deleveraging of 2,000 billion euros in European banks' balance sheets over the next 18 months (about 7% of the total balance). The Norwegian krone has remained strong against the euro over the past week, despite the continuing turmoil in the euro area. Yesterday morning it was announced that Statoil sells its stake in Statoil Fuel & Retail to Canadian Alimentation Couche-Tarde. The sale of the 54 percent ownership in Statoil ASA Statoil Fuel & Retail is estimated at 8.6 billion. Yesterday, the krone depreciated a few cents against the euro. The euro weakened against the dollar temporarily yesterday, and was within the range 1.30 to 1.32 as it has been since Easter. It may seem as if the investors are somewhat hesitant in terms of the development in Spain, both the auction today and the news in the weeks ahead. The somewhat hawkish minutes of the monetary policy meeting of the Bank of England surprised the market and contributed to sterling strengthening against both the dollar and the euro. British interest rates also rose on the minutes of the monetary policy meeting, as did the Swedish interest rates after the central bank held interest rates and the interest rate path unchanged. Both the Norwegian and U.S. interest rates fell due to slightly lower risk appetite. Stock markets fell back yesterday. European markets were weighed down by a fall in the banking sector. On the agenda today are the weekly initial claims figures. The Philadelphia Fed for April and existing home sales in March will also be published. From the euro area, we get consumer confidence. Tonight, Governor ystein Olsen speaks for ACI Norway. Only the presentation will be published on Norges Bank's website. Spain's auction of 2.5 billion euros in the 10-year government bonds will be closely watched. magne.ostnor@dnb.no Yesterdays key economic events (GMT) 07:30 Sweden Interest rate decision 08:30 UK Minutes MPC Global IMF publishes GFSR Todays key economic events (GMT) 07:30 Sweden Interest rate decision 08:30 UK Minutes MPC Global IMF publishes GFSR As of n/a Apr As of n/a Apr % Unit % Unit Prior 1.5 Prior 1.5 Poll 1.5 Poll 1.5 DNB 1.5 Actual 1.5

SEK & 3m STIBOR 9.0 8.9 8.8 8.7 9-Mar 2.40 2.20 2.00 29-Mar 18-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
19.04.2012

SPOT RATES AND FORECASTS

Oil spot & NOK TWI 135 125 115 105 9-Mar 96 94 92 90 18-Apr
$/b

29-Mar

NOK TWI ra.

EUR vs GBP & CHF 1.22 0.85 1.21 1.21 1.20

GBP r.a

0.84 0.83 0.82

CHF

9-Mar 29-Mar 18-Apr

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

Prior 81.29 1.312 0.819 1.202 7.553 8.859 7.439 5.758 7.083 0.854 9.228 6.756 8.316 1.173 10.810

Last 81.48 1.311 0.819 1.203 7.558 8.844 7.439 5.764 7.078 0.855 9.237 6.746 8.283 1.172 10.810

% 0.2% -0.1% 0.0% 0.1% 0.1% -0.2% 0.0% 0.1% -0.1% 0.2% 0.1% -0.1% -0.4% -0.1% 0.0%

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 1.0356 0.9914 0.9177 18.92 5.6754 1.6019 7.7608 127.27 0.2785 2.6339 0.5337 0.8162 3.1967 1.2527 29.5390

% -0.04% -0.01% 0.15% 0.01% 0.10% -0.03% 0.00% 0.06% -0.17% 0.06% 0.13% 0.02% 0.14% 0.12% 0.02%

EURSEK & OMXS 9.0 8.9 8.8 8.7 9-Mar

OMXS ra. EURSEK

550 500 450 400 350 29-Mar 18-Apr

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

NIBOR Prior 1.97 2.35 2.69 2.88 2.87 3.12 3.34 3.55

SWAP AND MONEYMARKET RATES STIBOR EURIBOR Last Prior Last Prior 1.94 1.89 1.92 0.36 2.31 2.15 2.18 0.66 2.66 2.40 2.43 0.98 2.88 2.51 2.54 1.16 2.87 2.08 2.09 1.13 3.12 2.23 2.23 1.48 3.34 2.40 2.40 1.84 3.56 2.55 2.56 2.20

Last 0.36 0.65 0.98 1.16 1.13 1.49 1.84 2.21

USD LIBOR Prior Last 0.24 0.24 0.47 0.47 0.73 0.73 0.89 0.89 0.68 0.70 1.12 1.14 1.59 1.61 2.08 2.09

Gov. Bonds, 10y 2.25 2.00 1.75 3.00 2.50 2.00

1.50 1.50 9-Mar 29-Mar 18-Apr

NOK, ra. SEK

10y 10y yield vs bund

NORWAY Prior Last 115.9 112.30 2.25 2.24 0.52 0.51

GOVERNMENT BONDS SWEDEN GERMANY US Prior Last Prior Last Prior 115.298 115.29 100.32 100.24 100.21875 1.83 1.83 1.73 1.72 1.98 0.10 0.11 0.25

Last 100.17 1.99 0.27

JPY and DowJones 85 13.5 13.0 80 12.5 75 12.0 9-Mar 29-Mar 18-Apr
USDJPY ra. DowJones, 1000

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
% 0.02 - 0.07 - 0.00 0.05 - 0.0 Last 115.6 118.0 1644.0

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

% -0.6% -0.4% -0.4% -1.7% -1.0% 0.0% -0.3% -1.7% -0.1%

USD and gold 1900 1.42 1800 1.38 1700 1.34 1600 1.30 1500 1.26 9-Mar 29-Mar 18-Apr
EURU SD ra. Gold

MISCELLANEOUS FRA NOK 3m Prior chg TWI Today JUN 2.25 2.26 -0.01 NOK 94.50 SEP 2.26 2.26 0.00 SEK 117.42 DEC 2.33 2.34 -0.01 EUR 103.21 MAR 2.40 2.41 -0.01 USD 79.64 FRA SEK 3m Prior chg GBP 82.80 JUN 2.11 2.11 0.00 Comm. Today SEP 1.94 1.93 0.01 Brent spot 115.6 DEC 1.91 1.92 -0.01 Brent 1m 118.2 MAR 1.90 1.91 -0.01 Spot gold 0.0 Sources to all tables and graphics: Reuters and DNB Markets

Stock ex. Today Dow Jones 13,032.8 Nasdaq 3,031.5 FTSE100 5,745.3 Eurostoxx50 2,327.8 Dax 6,732.0 Nikkei225 9,579.0 Oslo 421.55 Stockholm 486.63 Copenhagen 603.11

Morning Report
19.04.2012
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