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Morning Report

19.09.2012

Yen down after BoJ meeting
NOK & 3m NIBOR 7.50 7.40 7.30 7.20
3m ra.

2.50 2.35 2.20 2.05 1.90
EURNOK

9-Aug 29-Aug 18-Sep

SEK & 3m STIBOR 8.8 8.6 8.4 8.2 8.0 9-Aug
3m ra.

2.40 1.60 0.80 0.00 29-Aug 18-Sep
EURSEK

The Bank of Japan decided today to increase purchases of government bonds by 10 trillion yen to 80 trillion yen. The interest rate was, as expected, maintained at 0 to 0.1 percent. Bank of Japan introduced an inflation target of 1 percent and eased policy in February and followed up with increased bond purchases in April. After a period of relatively strong figures for the Japanese economy, partly as a result of a recovery with support from spending for rebuilding from last year's earthquake the key figures have lately been weakened. This is particularly true for exports and production. The conflict with China regarding the archipelago Diaoyo reinforces concerns about export performance. Japanese yen weakened on the decision of the central bank. Against the U.S. dollar the Japanese yen is 0.7 percent weaker this morning compared to yesterday morning. In the same period JPYNOK fell by 0.8 percent. Since yesterday morning, the euro has depreciated 0.3 percent against the U.S. dollar. The Norwegian krone has strengthened against both the euro and the dollar, but EURNOK around 7.46 is still a bit higher than we have been used to see in recent weeks. The Spanish 10-year government bond yield fell by 8 basis points yesterday, but is still about 20 bp. higher than a week ago. Spain borrowed yesterday more than 4.6 billion euros in a 12-month bill and a 18-month bill. The demand for the loans was slightly higher compared to the previous auction 21 August and the government exceeded the target. The interest rate on 12-month loan fell from 3.07 percent last time 2.835 percent now. In Sweden the Riksbank published the minutes of the last monetary policy meeting. It revealed little new relative to the press release that was released simultaneously with the interest rate decision, but the arguments and views of the MPC-members were described in more details along with the general discussion. Central bank Governor Stefan Ingves is part of the majority of the Monetary Policy Committee, which has long proved reluctant to cut rates further, for fear of contributing to build up financial imbalances. This fear was also apparent in the Governor's statement to the Parliament yesterday. Ingves stated that in the absence of other tools, such as requirements for installment payments, monetary policy must be used to prevent building up bubbles. "We are behind, and the more we are behind the more important it is for monetary policy to take care of this" he pointed out. It shows a more aggressive stance to limit lending and home price inflation than the one found in Norges Bank. In the U.S. the NAHB index rose three points to 40. The September figure supports thus the significant recovery that we have seen in this index over the past year. The index is still below the historical average, but the marked increase in recent months indicate that construction growth will continue. Activity in the housing market has gradually risen, albeit from historically low levels. Despite the improvement the effects on the economy will thus be small. Today U.S. numbers for housing starts and sales of existing homes, both for August, will be released. In Germany, the August ZEW index increased 7.3 points to -18.2. It was slightly better than expected. The index is still at a low level and lower than in June. The current condition index decreased from 18.2 to 12.6 against the expected decline to 17.7. This index, however, remains well above historical averages. ZEW index is a survey of sentiment among investors and analysts, and the ZEW institute assumes that the ECB's program of buying government bonds has contributed to the economic sentiment. The institute however points out that "the debt crisis is not solved yet, and the risks for economic activity remain". In our monthly assessment of our interest rates and currency forecast, we have found little reason to make major changes. The main exceptions are forecasts for the three-month money market interest rates, where money market premiums have declined and indicate lower 3m rates ahead. kyrre.aamdal@dnb.no Yesterday's key economic events (GMT) 07:30 Sweden Riksbank Minutes 08:30 UK CPI 09:00 Germany ZEW index 14:00 US NABH index Today’s key economic events (GMT) 03:00 Japan Bank of Japan 08:30 UK Minutes, MPC-meeting 12:30 USA Housing starts 14:00 USA Existing home sales As of Sep Aug Sep Sep As of Sep Aug Aug Unit y/y % Index Index Unit % mill mill Prior 2.6 -25.5 37 Prior 0-0.1 0.746 4.5 Poll 2.5 -19.0 38 Poll 0-0.1 0.760 4.6 Actual 2.5 -18.2 40 DNB 0-0.1

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Regional sales (+47) Bergen Bodø Fredrikstad Hamar Haugesund Lillehammer Kristiansand Oslo Stavanger Tromsø Trondheim Tønsberg Ålesund

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Morning Report
19.09.2012

SPOT RATES AND FORECASTS
Oil spot & NOK TWI 125 115 105 95 85 9-Aug 94 93 92 91 90 18-Sep
$/b

29-Aug

NOK TWI ra.

EUR vs GBP & CHF 1.22 0.82 1.22 0.80 1.21 0.78 1.21 1.20 0.76 9-Aug 29-Aug 18-Sep
GBP r.a CHF

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

Prior 78.84 1.305 0.803 1.212 7.452 8.541 7.454 5.712 7.254 0.873 9.293 6.546 8.312 1.147 10.637

Last 79.12 1.307 0.804 1.212 7.467 8.560 7.455 5.712 7.225 0.873 9.288 6.552 8.287 1.149 10.652

% 0.4% 0.2% 0.1% 0.0% 0.2% 0.2% 0.0% 0.0% -0.4% 0.0% -0.1% 0.1% -0.3% 0.2% 0.1%

In 1 m ...3 m 80 76 1.23 1.15 0.79 0.76 1.20 1.20 7.30 7.20 8.30 8.40 7.45 7.45 5.93 6.26 7.42 8.24 0.88 0.86 9.2 9.5 6.75 7.30 5.40 5.55 1.14 1.17 10.51 11.05

...6 m ...12 m 76 78 1.15 1.20 0.78 0.80 1.20 1.20 7.30 7.40 8.50 8.50 7.45 7.45 6.35 6.17 8.35 7.91 0.86 0.87 9.4 9.3 7.39 7.08 5.62 5.53 1.16 1.15 10.90 10.63

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

USD 1.0466 0.9735 0.9278 18.99 5.7052 1.6262 7.7531 122.32 0.2809 2.6419 0.5330 0.8288 3.1460 1.2237 30.8840

% 0.03% -0.09% -0.09% -0.30% -0.18% 0.10% 0.00% -0.21% -0.09% -0.19% -0.21% 0.14% -0.31% -0.16% -0.13%

EURSEK & OMXS 8.7 8.5 8.3 8.1 9-Aug 575 500 425 350 29-Aug 18-Sep
OMXS ra. EURSEK

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

NIBOR Prior 1.79 1.93 2.18 2.30 2.33 2.66 2.98 3.33

SWAP AND MONEYMARKET RATES STIBOR EURIBOR Last Prior Last Prior 1.80 1.55 1.54 0.07 1.92 1.65 1.65 0.16 2.16 1.85 1.85 0.41 2.29 1.95 1.95 0.55 2.35 1.54 1.55 0.65 2.68 1.75 1.75 1.06 3.01 2.00 2.01 1.46 3.36 2.23 2.25 1.89

Last 0.07 0.16 0.40 0.55 0.66 1.06 1.46 1.89

USD LIBOR Prior Last 0.22 0.22 0.38 0.38 0.67 0.66 0.83 0.82 0.47 0.48 0.84 0.85 1.31 1.32 1.84 1.86

Gov. Bonds, 10y 1.60 1.40 1.20 1.00
NOK, ra.

3.00 2.50 2.00 1.50
SEK

9-Aug 29-Aug 18-Sep

NORWAY Prior Last ot be found 97.35 10y 10y yield 2.26 2.28 vs bund 0.62 0.62

GOVERNMENT BONDS SWEDEN GERMANY Prior Last Prior Last 116.58 116.97 98.816 98.52 1.64 1.60 1.64 1.66 -0.01 -0.07

US Prior 98.03125 1.84 0.20

Last 98.25 1.83 0.16

14.0 13.5 13.0 12.5 12.0 9-Aug

JPY and DowJones

81 79 77

In 3m … 6m … 12m

INTEREST RATE FORECASTS NORWAY SWEDEN GERMANY 3m nibor 10y swap 3m stibor 10y swap 3m euribor 10y swap 1.90 3.25 1.65 2.25 0.25 1.75 1.90 3.25 1.65 2.25 0.25 1.75 2.05 3.50 1.65 2.50 0.25 2.00

US 3m libor 10y swap 0.45 1.75 0.45 1.75 0.45 2.25

75 29-Aug 18-Sep
USDJPY ra. DowJones, 1000

USD and gold 1820 1720 1620 1520
EURUSD ra.

1.32 1.28 1.24 1.20
Gold

9-Aug 29-Aug 18-Sep

MISCELLANEOUS FRA NOK 3m Prior chg TWI Today % DEC 1.89 1.89 0.00 NOK 93.36 0.12 MAR 1.88 1.88 0.00 SEK 113.86 - 0.20 JUN 1.92 1.92 0.00 EUR 101.75 0.23 SEP 1.96 1.95 0.01 USD 79.13 - 0.08 FRA SEK 3m Prior chg GBP 84.30 - 0.0 DEC 1.51 1.51 0.00 Comm. Today Last MAR 1.41 1.40 0.00 Brent spot 113.5 116.9 JUN 1.39 1.38 0.01 Brent 1m 112.7 112.0 SEP 1.39 1.38 0.01 Spot gold 0.0 1769.5 Sources to all tables and graphics: Reuters and DNB Markets

Stock ex. Today Dow Jones 13,564.6 Nasdaq 3,177.8 FTSE100 5,868.2 Eurostoxx50 2,553.4 Dax 7,347.7 Nikkei225 9,232.2 Oslo 455.80 Stockholm 517.10 Copenhagen 637.62

% 0.1% 0.0% -0.4% -1.2% -0.8% 0.0% -0.9% -0.7% 0.1%

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