Daily Comment Raiffeisen RESEARCH

27 July 2011

Chart of the day

30 Minutes QFDXc1
Price EUR Cndl; QFDXc1; Last Trade 22:00 26.07.2011; 7.362,5; 7.362,5; 7.346,0; 7.354,0 2MA; QFDXc1; Last Trade(Last); 13; 144; Simple; 22:00 26.07.2011; 7.358,1; 7.309,4 38,2% 7.386,3 Cndl; QFDXc1; Last Trade 22:00 26.07.2011; 7.362,5; 7.362,5; 7.346,0; 7.354,0 2MA; QFDXc1; Last Trade(Last); 13; 144; Simple; 22:00 26.07.2011; 7.358,1; 7.309,4 38,2% 7.377,9 12:00 25.07.2011 - 10:00 27.07.2011 (FFT) Price EUR

Important indicators today

RBI consensus 0.3% last 2.1 %
7.390 7.385 7.380 7.375 7.370 7.365 7.360 7.355 7.350 7.345

7.390 7.385 7.380

USA
14:30 n.a. Durable goods orders, mom Boeing, Dow Chemical EZ: Money supply M3, yoy BAT, Clariant, Daimler, Elan, Merck KGaA, ArcelorMittal, Pirelli, Puma, Peugeot, Banco Santander BZ: Total Outstanding Loans Feds Beige Book Jun. Q2-figures Jun Jul Q2-figures 2.3% 2.3% 2.4% 2.3% 2.4% 2.3% 0.6%

7.375 7.375 7.370 7.365 7.360 7.355 7.350 7.345

38,2% 7.372,9

Europe
10:00 n.a. ~15:00 GE: Consumer prices, yoy

61,8% 7.342,5

7.340 7.335 7.330 7.325

7.321,9

7.340 7.335 7.330 7.325 7.320 7.315 7.310 7.305

.1 12:30 14:30 16:30 18:30 20:30 08:30 10:30 12:30 14:30 16:30 18:30 20:30 08:30

7.320 7.315 7.310 7.305

.1

Emerging Markets
15:30 Jun Jun/Jul n.a. n.a. n.a. n.a. 1,804 n.a.

25 Juli 2011

26 Juli 2011

27 Juli 2011

Source: Thomson Reuters, Raiffeisen RESEARCH

DAX Future

Events
20:00 Source: Bloomberg, Raiffeisen RESEARCH

Last: 7354 Sell 7344 Target: 7322 7309 Rounding Top, stop 7375 -> 7388 7405. July 27h, 2011 07:50CET

Market overview
cur.
Interest rates, yields 3M Euribor EUR 3M Libor USD Bund Future EUR US T Note Future Currencies EUR/USD EUR/JPY EUR/CHF EUR/CZK EUR/HUF EUR/PLN Equity markets S&P 500 Dow Jones I. A. Nasdaq Comp. DJ EuroStoxx 50 DAX ATX Nikkei 225 Emerging Markets Hang Seng (China) Sensex (India) Bovespa (Brazil) JALSH (South Africa) Commodities Brent Oil USD/bbl Gold USD/oz Credit markets iTRAXX Europe ITRAXX Crossover iTRAXX Fin. Senior 5J CDS Greece. 5J CDS Spain 5J CDS Portugal 105 397 167 1658 257 941 -1 BP -3 BP -3 BP 23 BP -5 BP -8 BP 126 531 210 2571 301 1131 94 352 107 661 121 184 8 BP -13 BP -11 BP 584 BP -21 BP 519 BP 118 1624 0.1% 0.3% 125 1625 79 1157 24.4% 14.3% 12601 18483 59340 31869 0.0% 14219 -0.2% 21109 -1.1% 73103 -0.6% 33335 11296 17296 58631 26432 -0.7% -9.9% -14.4% -0.8% 1332 12501 2840 2740 7349 2679 10049 -0.4% 1371 1040 9937 2099 2560 5834 2366 8228 5.9% 8.0% 7.1% -1.9% 6.3% -7.7% -1.8% 1.453 112.950 1.163 24.333 267.740 3.998 -0.2% -0.2% -0.1% 0.0% -0.1% 0.0% 1.49 123.3 1.4 25.4 289.6 4.12 1.26 105.4 1.1 23.9 261.9 3.83 -8.5% 4.0% -7.5% -2.8% -4.1% 0.9% 1.62% 0.2 BP 0.25% 0.1 BP 128.34 124.38 0.1% -0.1% 1.6% 0.5% 134.8 125.4 0.9% 0.2% 119.9 115.1 60.9 BP -5.0 BP 2.4% 5.3%

1T 52W H

52W L

Ytd

-0.7% 12876 -0.1% -0.1% 0.1% 0.3% 2888 3077 7600 3013

-0.5% 10892

Established markets: There is still no solution in sight in the US debt dispute between Democrats and Republicans. A vote in the House of Representatives on a bill by the leading Republican delegate Boehner tabled for today will now be held tomorrow at the earliest. However, it is already clear that this will be rejected by the Senate, which is dominated by the Democrats, and by President Obama. It is therefore becoming ever more likely that no agreement will be reached by 2 August, resulting in a so-called government shutdown as of 3 August. The bond markets remain surprisingly unimpressed by this precarious situation. Yields on US government bonds shrank slightly yesterday and the Treasury reported a brisk demand at an auction of 2-year paper. At 0.417%, the maximum yield was lower than those at the past four auctions. In the eurozone the subject of sovereign debt is also still on the agenda. Italy cancelled an auction of bonds with medium to long maturities, which had been scheduled for mid-August. The reason given, that sufficient liquidity was available so that fewer funds were required than originally thought, was intended to brighten sentiment on the markets. However, the opposite was the case. In the eyes of many market participants this is already the first indication that the current yield level might be too high for Italy in the long run. Yields on Italian and Spanish bonds promptly rose further. Equity markets: In addition to festering uncertainty surrounding negotiations for raising the US debt ceiling, a number of disappointing sets of company data placed a damper on sentiment on Wall Street. Industrial conglomerate 3M was the worst performer in the Dow Jones, closing 5.4% down. Although the manufacturer of such products as Post-it and automotive parts exceeded the consensus, investors had evidently been expecting more. Market participants also found a hair in the soup with logistics company UPS: although revenues and earnings were up respectably thanks to price hikes, the muted outlook for the third quarter exerted downside pressure

Prices as of 27 July 11, 07:55 a.m. (CET) Source: Bloomberg

Daily Comment

on the stock (down 3.3%). AK Steels quarterly figures were clearly disappointing. The third largest US steel maker fell short of earnings expectations due to higher input costs (down 17.5%). However, there was some positive news. Printer producer Lexmark released convincing figures, causing the stock to climb sharply in an initial reaction (up 17.7%). Internet merchant Amazon.com then went on to release respectable figures after the close of trading. Weak conditions overseas and the strong yen exerted pressure on the Japanese equities market as well. European bourses are likely to get off to a weaker start to trading this morning. Credit markets: The US CDS curve has now inverted and a technical default is now at least being discussed more frequently. A reporting season that cannot fully convince us is also likely to have a negative impact. The fact that Deutsche Bank drastically reduced its exposure to Italy from EUR 8 bn in December 2010 to EUR 996 mn at the end of June 2011 was the subject of intensive discussion in many of the media yesterday. This further stokes up fears regarding Europes growing periphery. Risk premiums, which decreased yesterday - also for banks - in spite of the negative news flow are therefore likely to come under pressure again. The primary market for corporate bonds remained practically closed yesterday. Emerging Markets: In spite of restrictive monetary policies, Chinese industrial profits rose in H1 by 28.7% yoy. Economic growth in South Korea slowed to 3.4% yoy in Q2, mainly due to the strong won and the debt crisis in Europe, which led to weaker exports. CEE: As expected, Hungary decided not to change its key interest rate. It was left at 6.0% and in our view we will see no rate reductions in the rest of 2011. Junes retail sales in Poland were 10.9% p.a. (1.4% p.q.), somewhat below our and the consensus estimates. Unemployment data for June stayed at a level of 11.8%. Retail sales for Hungary in May came out at 0.7% p.a., stronger than the consensus anticipated but just a bit below our own forecasts. Though no relevant macro-economic data for the CEE is scheduled for publishing today, bonds will be issued in Poland by the state owned BGK for around PLN 1-2.5 billion to finance street construction projects. Guaranteed by the Polish state, the BGK indicates that the bonds will mature in 2014 and 2018.

Market overview
current
Other interest rates EUR Eonia 1M Euribor EUR 3M Euribor EUR 6M Euribor EUR 12M Euribor EUR 2Y Swap EUR 3Y Swap EUR 5Y Swap EUR 10Y Swap EUR Other currencies EUR/GBP EUR/HRK EUR/RON EUR/SEK EUR/RUB EUR/UAH EUR/TRY EUR/BRL EUR/CNY EUR/ZAR Bond market 2Y Bund EUR 5Y Bund EUR 10Y Bund EUR 2Y US Treasury 5Y US Treasury 10Y US Treasury Interest rates CEE 3M Pribor 3M Wibor 3M Bubor 10Y Czech Rep. 10Y Poland 10Y Hungary Equity markets CEE Turkey (ISE Nat. 100) Croatia (CROBEX) Poland (WIG20) Romania (BET) Russia (MICEX) Serbia (BELEX15) Czech Rep. (PX) Hungary (BUX) Commodities WTI Oil USD/bbl Fuel oil USD/mt Diesel USD/mt CO2 EUA Fut. EUR/mt Silver USD/oz Platinum USD/oz Palladium USD/oz Steel USD/mt Aluminium USD/mt Copper USD/mt 99.5 977.3 1008.0 12.7 41.0 1809.8 841.4 613.0 2650.0 9820.0 -0.1% -0.1% 0.0% -0.5% 0.2% 0.1% 0.7% 2.7% 1.1% 115.6 1064.5 n.a. 15.8 49.8 862.3 609.0 76.9 614.5 n.a. 13.2 17.3 459.3 450.0 5.4% 28.2% 27.6% -6.9% 32.5% 2.2% 4.9% 11.9% 7.3% 2.3% 61389 2162 2721 5391 1722 724 1186 21725 0.6% 4.7% -0.5% -0.4% 0.0% -1.0% -1.6% -0.7% 71777 57655 2338 2942 6099 1865 829 1278 1773 2373 4973 1328 600 1107 -7.0% 2.4% -0.9% 2.3% 2.0% 11.1% -3.2% 1.9% 0.8 4.6 6.1 3.9 5.8 7.4 0.0 BP 0.0 BP 0.0 BP 0.4 BP -4.5 BP -4.0 BP 0.9% 4.6% 6.1% 4.2% 6.4% 8.4% 0.8% 3.7% 5.3% 3.2% 5.3% 6.6% -4 BP 75 BP 24 BP 1 BP -25 BP -58 BP 1.34% 1.92% 2.74% 0.41% 1.50% 2.97% 0.7 BP -2.1 BP -2.3 BP 2.7 BP 1.8 BP 2.0 BP 1.9% 2.8% 3.5% 0.8% 2.4% 3.7% 0.6% 1.2% 2.1% 0.3% 1.0% 2.4% 47.4 BP 8.3 BP -22.3 BP -17.9 BP -50.8 BP -32.1 BP 0.884 7.450 4.234 9.071 39.940 11.614 2.464 2.232 9.355 9.688 0.0% 0.0% 0.0% 0.0% 0.1% 0.2% -0.1% 0.8% 0.2% 0.1% 0.9 7.5 4.3 9.5 43.9 11.9 2.5 2.4 9.7 10.0 0.8 7.2 4.1 8.7 38.8 9.9 1.9 2.2 8.5 8.7 3.1% 0.9% -1.1% 0.9% -2.2% 8.2% 16.1% 0.4% 5.7% 8.4% 0.99% 1.45% 1.62% 1.83% 2.19% 2.01% 2.59% 1.6 BP 0.1 BP 0.2 BP 0.4 BP 0.1 BP 1.2 BP 0.5 BP 1.7% 1.5% 1.6% 1.8% 2.2% 2.5% 2.8% 3.2% 3.8% 0.3% 0.6% 0.9% 1.1% 1.4% 1.1% 1.4% 1.6% 2.3% 17.4 BP 66.6 BP 60.9 BP 60.4 BP 68.7 BP 45.5 BP 9.6 BP 10.2 BP -27.0 BP

1T 52W H 52W L

Ytd

1.99% -19.8 BP 3.05% -16.6 BP

24531 20147

1886.5 1489.0

2803.0 1982.3

1.7% 10190.0 7016.0

Prices as of 27 July 11, 07:55 a.m. (CET) Source: Bloomberg

Daily Comment
This report was completed on 27 July 2011

Acknowledgements

Editor
Raiffeisen RESEARCH GmbH A-1030 Vienna, Am Stadtpark 9 Tel: +43 1 717 07-1521 Head: Peter Brezinschek (1517) Research Sales: Werner Weingraber (5975) Economics, Fixed Income, FX: Valentin Hofsttter (Head, 1685), Jrg Angel (1687), Wolfgang Ernst (1500), Gunter Deuber (5707), Julia Neudorfer (5842), Matthias Reith (6741), Andreas Schwabe (1389), Gintaras Shlizhyus (1343), Gottfried Steindl (1523), Martin Stelzeneder (1614) Credit/Corporate Bonds: Christoph Klaper (Head, 1652), Christoph Ibser (5913), Igor Kovacic (6732), Martin Kutny (2013), Peter Onofrej (2049), Gleb Shpilevoy (1461), Alexander Sklemin (1212), Jrgen Walter (5932) Stocks: Helge Rechberger (Head, 1533), Aaron Alber (1513), Christian Hinterwallner (1633), Jrn Lange (5934), Hannes Loacker (1885), Richard Malzer (5935), Johannes Mattner (1463), Christine Nowak (1625), Leopold Salcher (2176), Andreas Schiller (1358), Connie Schmann (2178), Magdalena Wasowicz (2169) Quant Research/Emerging Markets: Veronika Lammer (Head, 3741), Mario Annau (1355), Lydia Kranner (1609), Nina Kukic (1635), Albert Moik (1593), Manuel Schuster (1529) Technical analysis: Stefan Memmer (1421), Robert Schittler (1537)

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