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Investment Research — General Market Conditions

22 July 2010

Danske Daily
Markets overnight
Fed Chairman Ben Bernanke signalled no policy shift in connection with his testimony yesterday before the Senate Banking Committee. The impression from Bernanke’s prepared statement is that we are still far from a situation in which the Fed will consider further monetary easing, see prepared statement. Bernanke stressed that board members’ recent downgrade of their view on the US economy should mainly be seen as a minor adjustment. In addition, the statement focused on how to unwind monetary stimulus while how to ease monetary policy further if needed was not mentioned at all. That said, Bernanke acknowledged that the “economic outlook remains unusually uncertain” and kept all policy options open. The US stock market sold off in late trade on disappointment that Fed Chairman Bernanke’s statement did not show any movement towards an easing bias. Q2 earnings reports on balance were better than expected, with Fiat, Morgan Stanley Wells Fargo and EBay all beating expectations, but this was shrugged by the market. S&P 500 yesterday closed down 1.3%. The negative sentiment on the stock market has continued in Asian trade with Nikkei and Hang Seng this morning down 0.6% and 0.2%. US bond yields lunged and the yield curve flattened yesterday, taking its lead mainly from the stock market. US 2-year bond yield dropped 2bp to a new record low of 0.55% and 10-year US bond yields have declined 6bp to 2.87% since market close in Europe yesterday. In the FX market USD and JPY have strengthened on the back of the deterioration in the risk sentiment in the market. In addition, increasing scepticism about the outcome of the EU stress tests to be released tomorrow is weighing a bit on EUR. The Scandinavian currencies SEK and NOK are this morning trading largely unchanged against EUR.
Market movers today:

Flash Manufacturing and Service PMIs in Germany (9:30 CET), France (9:50 CET) and the euro area (10:00 CET) US Existing home sales (16:00 CET) Fed Chairman Bernanke gives semi-annual report to the House (15:30 CET) Q2 earnings (incl. Microsoft, Caterpillar, Amazon, Nokia and Volvo )

Market overview
07:30 S&P500 (clo se) S&P500 fut (chng fro m clo se) Nikkei Hang Seng 17:00 US 2y gov US 10y gov iTraxx Europe (IG) iTraxx Xover (Non IG) 0,58 2,93 113 425 1069,6 1062,3 9200,7 20449,9 07:30 0,55 2,87 116 524
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1 day +/-,%
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-1,28 -0,15 -0,84 -0,18 +/-, bp -2,4 -6,3 2,3 98,7 +/-, % -0,30 -0,81 -0,44 -0,22 0,02 0,16 USD -0,44 -0,63

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Global Daily
The biggest event today will be the release of flash manufacturing and service PMIs in the euro area. We expect manufacturing PMIs to decline a bit more than consensus underlining that the recovery in manufacturing activity is currently losing some momentum. Fed Chairman Ben Bernanke will today repeat his testimony before the House Banking Committee but barring surprises in the Q&A session there should be little new information from Bernanke today. In the US we expect home sales to have taken another big hit in June mostly reflecting the impact from the expiry of the first-time-homebuyer tax credit in April. However, this is “old” news and will probably not have a big impact on markets.

EUR/USD USD/JPY EUR/CHF EUR/GBP EUR/SEK EUR/NOK

1,281 87,170 1,35 0,843 9,451 8,01

1,278 86,460 1,34 0,841 9,454 8,02

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Oil Brent, USD Gold, USD

75,5 1192,7

75,2 1185,2

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Note: * The iTraxx Europe Index show the spread development for the most liquid investment grade CDS contracts in the euro credit market. **The iTraxx Europe Crossover show the spread development of the most liquid non-investment grade CDS contracts in the euro credit market.

Scandi Daily
With no major economic releases today, focus in Scandinavia will mainly be on earnings reports, from among others Nokia, Volvo, ABB and Swedbank.

Source: Bloomberg

From 12-30 July Danske Daily will be published in a reduced summer edition
Senior Analyst Flemming J. Nielsen +45 45 12 85 35 flemm@danskebank.com

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Danske Daily

Key figures and events
Thursday, July 22, 2010
6:30 8:45 8:45 9:30 9:30 9:30 9:50 9:50 10:00 10:00 10:00 10:30 10:30 11:00 14:30 14:30 15:30 16:00 16:00 16:00 OTH CAD JPY FRF FRF DEM DEM DKK FRF FRF EUR EUR EUR GBP GBP EUR CAD USD USD USD USD EUR Bank of Canada publish Monetary Policy Report All Industry Index Business confidence indicator Consumer confidence indicator PMI Manufacturing, Preliminary PMI Services, Preliminary Consumer confidence PMI Services, Preliminary PMI Manufacturing, preliminary PMI Manufacturing, Preliminary PMI Composite, Preliminary PMI Services, preliminary Retail Sales ex auto fuel Retail Sales inc. auto fuel Industrial new orders Retail sales Initial jobless claims Leading indicator Existing home sales Consumer confidence m/m|y/y m/m|y/y m/m|y/y m/m 1000 Index m (m/m) Net balanc Jun Jun Jul -16 m/m Index Net bal. Index Index Index Index Index Index Index May Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jun Jun May May 450 -0.3% 4.90 (-13.5%) 5.20 (-8.1%) -17 -0.3%|.. 57.6 54.5 0.5 59.8 54.5 55.0 55.1 55.2 60.0 54.1 55.2 55.2 55.0 0.6%|2.4% 0.5%|1.0% -0.2%|19.5% 0.5% -0.4% 95 -40 58.0 54.6 1.8% 95 -39 58.4 54.8 -1.5 60.8 54.8 55.6 56.0 55.5 0.5%|3.4% 0.6%|2.2% 0.6%|21.8% -2.0% 429 0.4% 5.66 (-2.2%) -17 Period Danske Bank Consensus Previous

Earnings - ABB, Volvo, Nokia, Caterpillar, Microsoft, American Express, Amazon.com

Fed's Bernanke (voter, neutral) Gives semiannual report to the House Panel

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22 July 2010

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22 July 2010

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