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MRE111101

MRE111101

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06/16/2014

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Morning report
Greek shock-move
The European debt fear is back with a vengeance, after the news that Greece will arrangea referendum in January to approve the package agreed on last week.The European debt fear is back with a vengeance, after the news that Greece will arrangea referendum in January to approve the package agreed on last week.
01-Nov-2011
The Greek prime minister shocked markets when he announced in a speech to his party colleagueslast night that there will be a referendum on the outcome of Thursday's rescue plan.
Papandreouwishes for, and expects, the people's support. The market is far more pessimistic.
According to Financial Times an opinion poll conducted on Sunday showed that 6 out of 10 Greeksare opposed to the plan, which entails severe cuts in jobs and pensions. The referendum will beheld in January next year. At that time, the government will be about to run out of money again,after having received an 8 bn tranch in mid-November.The Greek prime minister shocked markets when he announced in a speech to his party colleagueslast night that there will be a referendum on the outcome of Thursday's rescue plan.
Papandreouwishes for, and expects, the people's support. The market is far more pessimistic.
According to Financial Times an opinion poll conducted on Sunday showed that 6 out of 10 Greeksare opposed to the plan, which entails severe cuts in jobs and pensions. The referendum will beheld in January next year. At that time, the government will be about to run out of money again,after having received an 8 bn tranch in mid-November.
NOK & 3m NIBOR
2.903.003.103.2031-Oct11-Oct21-Sep7.407.607.808.00
 
Weak PMI readings from China, the global growth locomotive, are not helping to brighteninvestors' mood.
The state index edged down from 51.2 in September to 50.4 in October, thelowest level since February 2009. The private index (often regarded as more reliable) shows asomewhat more positive momentum. It has recovered to 50.4, after having been slightly below 50since July.
Weak PMI readings from China, the global growth locomotive, are not helping to brighteninvestors' mood.
The state index edged down from 51.2 in September to 50.4 in October, thelowest level since February 2009. The private index (often regarded as more reliable) shows asomewhat more positive momentum. It has recovered to 50.4, after having been slightly below 50since July.
3m ra.EURNOK
 
With market unrest came the traditional safe haven effects:
long-term US and Germangovernment bond yields fell, as did stock markets worldwide. The euro weakened, as did small,illiquid currencies like the Scandies. The developments during the night clearly show that
themarket forces trumps the effect of interventions from the Japanese authorities
. Despite amassive sale of yen (according to a Japanese newspaper the amount spent is at record-high 10 000bn) the Japanese currency has strengthened by 1.6% against the US dollar since yesterdaymorning.
With market unrest came the traditional safe haven effects:
long-term US and Germangovernment bond yields fell, as did stock markets worldwide. The euro weakened, as did small,illiquid currencies like the Scandies. The developments during the night clearly show that
themarket forces trumps the effect of interventions from the Japanese authorities
. Despite amassive sale of yen (according to a Japanese newspaper the amount spent is at record-high 10 000bn) the Japanese currency has strengthened by 1.6% against the US dollar since yesterdaymorning.
SEK & 3m STIBOR
2.452.502.552.6031-Oct11-Oct21-Sep8.99.09.19.29.39.4
 
Mario Draghi took over as ECB governor yesterday,
and will have his debut at Thursday'smonetary policy meeting. Yesterday's European macro releases were an excellent illustration of (one of) ECB's current dilemmas: The combination of high inflation and a weak economicdevelopment. Inflation increased to 3.0% y/y in October (expected 2.9%). This was the 11
th
 consecutive month of inflation above target in the euro zone. At the same time, unemploymentclimbed further, to 10.2% in September (expected 10.0%). The number of unemployed persons,16.2 million, is the highest ever. The real economy clearly calls for a lower interest rate, but Draghiwill surely find it difficult to start his carrier by cutting the rate in a situation where inflation is highand on the rise.
Mario Draghi took over as ECB governor yesterday,
and will have his debut at Thursday'smonetary policy meeting. Yesterday's European macro releases were an excellent illustration of (one of) ECB's current dilemmas: The combination of high inflation and a weak economicdevelopment. Inflation increased to 3.0% y/y in October (expected 2.9%). This was the 11
3m ra.EURSEK
 Headquarters
+47 030000021 OsloStranden 21
Offices AbroadNew York
+1 212 681 3800
London
+44 207 6211111
Shanghai
+86 21 6132 2888
Singapore
+65 6220 6144
Stockholm
+46 8 4734850
Sales Oslo (+47)
 Equity 22 94 89 40Fixed Income 22 01 78 20FX/IR 22 01 76 50
Regional sales (+47)Bergen
55 21 95 80
 Bodø
75 55 87 60
Fredrikstad
69 39 41 50
Hamar
61 05 14 69
Haugesund
52 72 09 06
Lillehammer
61 27 32 27
Kristiansand
38 07 28 62
Oslo
22 01 76 50
 Stavanger
51 84 04 30
Tromsø
77 62 96 80
Trondheim
73 58 74 89
Tønsberg
33 37 13 00
Ålesund
73 84 60 09
Research Regional Sales (+47)
Eirik Larsen 22 01 76 55
Research FX/IR (+47)
Øystein Dørum 22 01 76 56Kjersti Haugland 22 01 78 03Ole André Kjennerud 22 01 78 24Knut A. Magnussen 22 01 76 63Maren Romstad 22 01 76 64Camilla Viland 22 01 77 41Kyrre Aamdal 22 01 76 67
Credit Research (+47)
Ole Einar Stokstad 22 01 78 37Mikael L. Gjerding 22 01 77 62Åse Haagensen 22 01 76 93Rolv Kristian Heitmann 22 01 76 77Thomas Larsen 22 01 77 36Knut Olav Rønningen 22 01 78 15th
 consecutive month of inflation above target in the euro zone. At the same time, unemploymentclimbed further, to 10.2% in September (expected 10.0%). The number of unemployed persons,16.2 million, is the highest ever. The real economy clearly calls for a lower interest rate, but Draghiwill surely find it difficult to start his carrier by cutting the rate in a situation where inflation is highand on the rise.
Norges Bank surprised the market yesterday by announcing that the central bank's FXpurchases for the Government's Pension Fund Abroad will be record-high in November.
 The daily purchases will amount to NOK 1 600 million. Government income from the oil sectorcompared to the amount needed to cover the budget deficit has clearly exceeded expectations. TheNOK weakened immediately after the announcement. Norwegian retail sales fell by 0.7% m/m inSeptember, which matches well with the marked drop in consumer confidence lately. Weak salesmay imply that consumers want to step carefully in today's uncertain economic climate, despitesolid income growth and low interest rate costs. We doubt that the prudence will show in today'shouse price release, where we expect a 0.8% m/m rise in October.
Norges Bank surprised the market yesterday by announcing that the central bank's FXpurchases for the Government's Pension Fund Abroad will be record-high in November.
 The daily purchases will amount to NOK 1 600 million. Government income from the oil sectorcompared to the amount needed to cover the budget deficit has clearly exceeded expectations. TheNOK weakened immediately after the announcement. Norwegian retail sales fell by 0.7% m/m inSeptember, which matches well with the marked drop in consumer confidence lately. Weak salesmay imply that consumers want to step carefully in today's uncertain economic climate, despitesolid income growth and low interest rate costs. We doubt that the prudence will show in today'shouse price release, where we expect a 0.8% m/m rise in October.
Today's most important macro release
is the US manufacturing ISM, which is expected to edgeup from 51.6 in September to 52.0 in October. UK Q3 GDP will also be released today, and isexpected to reveal that the British economy has recovered from the terribly weak 0.1% q/q in Q2to still-weak 0.4% in Q3. The Norwegian and the Swedish PMIs are expected to fall slightly (to 53.0and 47.0, respectively).
Today's most important macro release
is the US manufacturing ISM, which is expected to edgeup from 51.6 in September to 52.0 in October. UK Q3 GDP will also be released today, and isexpected to reveal that the British economy has recovered from the terribly weak 0.1% q/q in Q2to still-weak 0.4% in Q3. The Norwegian and the Swedish PMIs are expected to fall slightly (to 53.0and 47.0, respectively).
kjersti.haugland@dnbnor.nokjersti.haugland@dnbnor.no
Yesterday's key economic events (GMT)Yesterday's key economic events (GMT)As of Unit Prior Poll Actual08:00 Norway Norges Banks FX purchases Nov Mill. 550160009:00 Norway Retail sales Sep % 1.7 0.2 -0.710:00 EMU CPI, flash Oct y/y % 3.0 2.9 3.001:00 China PMI (public) Oct index 51.2 51.6 50.4Today’s key economic events (GMT)As of Unit Prior Poll DnB NOR08:00 Norway PMI Oct index 54.8 53.7 53.009:30 UK GDP Q3 q/q % 0.1 0.413:00 USA ISM, manufacturing Oct index 51.6 52.2
 
Morning report
 
01-Nov-2011
 
Oil spot & NOK TWI
94969810031-Oct11-Oct21-Sep100105110115120
FX Prior Last % In 1 m ...3 m ...6 m ...12 m FX USD %USDJPY 78.21 78.14 -0.1% 80 80 80 90 AUD 1.0401 -1.30%EURUSD 1.386 1.378 -0.6% 1.40 1.35 1.30 1.25 CAD 1.0042 0.45%EURGBP 0.862 0.859 -0.3% 0.88 0.86 0.84 0.82 CHF 0.8825 0.55%EURCHF 1.216 1.215 0.0% 1.23 1.23 1.23 1.25 CZK 18.10 0.69%EURNOK 7.701 7.722 0.3% 7.80 7.80 7.70 7.70 DKK 5.4030 0.61%EURSEK 9.016 9.037 0.2% 9.20 9.10 9.00 9.00 GBP 1.6035 -0.36%EURDKK 7.441 7.442 0.0% 7.45 7.45 7.45 7.45 HKD 7.7683 -0.01%USDNOK 5.556 5.605 0.9% 5.57 5.78 5.92 6.16 ISK 115.18 0.30%JPYNOK 7.105 7.180 1.0% 6.96 7.22 7.40 6.84 KWD 0.2754 0.04%SEKNOK 0.855 0.855 0.0% 0.85 0.86 0.86 0.86 LTL 2.5073 0.63%GBPNOK 8.931 8.995 0.7% 8.9 9.1 9.2 9.4 LVL 0.5115 0.63%USDSEK 6.507 6.564 0.9% 6.57 6.74 6.92 7.20 NZD 0.8025 -0.52%JPYSEK 8.320 8.403 1.0% 5.26 5.39 5.54 6.48 PLN 3.2275 1.65%NOKSEK 1.172 1.171 -0.1% 1.18 1.17 1.17 1.17 SGD 1.2673 0.98%GBPSEK 10.459 10.523 0.6% 10.45 10.58 10.71 10.98 RUB 30.6795 1.48%
SPOT RATES AND FORECASTS (Source: Reuters and DnB NOR Markets)
 
NOK TWI ra.$/b
 
EUR vs GBP & CHF
0.850.860.870.880.8931-Oct11-Oct21-Sep1.101.151.201.25GBP r.aCHF
 
Prior Last Prior Last Prior Last Prior Last1m 2.90 2.77 2.33 2.34 1.31 1.31 0.25 0.253m 3.13 3.04 2.54 2.56 1.53 1.53 0.43 0.436m 3.34 3.27 2.57 2.59 1.74 1.74 0.62 0.6212m 3.56 3.49 2.63 2.65 1.90 1.90 0.77 0.773y 3.14 3.09 2.25 2.19 1.63 1.57 0.73 0.725y 3.42 3.33 2.39 2.30 1.93 1.90 1.28 1.297y 3.63 3.53 2.56 2.44 2.27 2.19 1.79 1.8010y 3.84 3.71 2.64 2.51 2.56 2.48 2.27 2.28Prior Last Prior Last Prior Last Prior Last10y 113.05 108.65 114.792 114.86 101.981 103.43 100.07813 100.1310y yield 2.73 2.71 1.95 1.93 2.06 1.87 2.12 2.12vs bund 0.67 0.84 -0.12 0.07 0.05 0.263m nibor 10y swap 3m stibor 10y swap 3m euribor 10y swap 3m libor 10y swapIn 3m 3.15 4.25 2.50 3.00 1.50 3.00 0.45 2.756m 3.15 4.50 2.55 3.25 1.50 3.25 0.35 3.0012m 3.35 4.50 2.65 3.25 1.50 3.25 0.35 3.25
SWAP AND MONEYMARKET RATES (Source: Reuters)GOVERNMENT BONDS (Source: Reuters)INTEREST RATE FORECASTS
NIBOR STIBOR EURIBOR USD LIBORNORWAY SWEDEN GERMANY USNORWAY SWEDEN GERMANY US
 
Gov. Bonds, 10y
2.002.202.402.602.803.0031-Oct11-Oct21-Sep1.501.752.002.25NOK, ra.SEK
 
JPY and DowJones
7677787931-Oct11-Oct21-Sep10111213USDJPY ra.DowJones, 1000
 
USD and gold
1.321.371.421.4731-Oct11-Oct21-Sep150016001700180019002000
 
 
FRA NOK 3m Prior chg TWI Today % Stock ex. Today %DEC 2.89 2.93 -0.04 NOK 96.57 0.31Dow Jones 11,955.0-2.3%MAR 2.68 2.71 -0.03 SEK 119.35 0.15Nasdaq 2,684.4-1.9%JUN 2.55 2.60 -0.05 EUR 106.85 0.43- FTSE100 5,544.2-2.8%SEP 2.53 2.58 -0.05 USD 76.85 0.45Eurostoxx50 2,385.2-3.1%FRA SEK 3m Prior chgGBP 80.30 0.00- Dax 6,141.3-3.2% DEC 2.52 2.54 -0.02Comm. Today LastNikkei225 8,835.50.0% MAR 2.17 2.21 -0.04 Brent spot 109.0 109.0 Oslo 384.22-1.5%JUN 2.06 2.11 -0.04 Brent 1m 108.7 109.6 Stockholm 452.53-3.2%SEP 2.01 2.06 -0.06 Spot gold 1722.0 1722.0 Copenhagen 475.19-3.2%
 
EURUSD ra.Gold
 
EURSEK & OMXS
35040045050031-Oct11-Oct21-Sep8.89.09.29.4OMXS ra.EURSEK
 

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