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Morning Report

13.02.2012

One step closer in Greece
NOK & 3m NIBOR 8.00 7.80 7.60 7.40
3m ra.

Additional austerity measures have been adopted in Greece during the night, with 80,000 demonstrators in the streets and violent riots as a backdrop.
3.20 2.90 2.60 2.30

3-Jan 23-Jan 10-Feb
EURNOK

A solid majority (199 out of 300) of the members of the Greek parliament voted in favour of the additional 2012 cuts of 3.3 billion euros set up as a condition by the EU/IMF to receive the next loan tranche of 130 billion euros. These include 300 million euros extra in pension cuts, 22 per cent reduction of the minimum wage (to 560 euros a month) and 150' fewer jobs in the public sector over the next three years. 43 members belonging to the socialist and the conservative party in Papademos' coalition government voted against the plan, and were consequently expelled from their respective parties. The violent riots have now increased in strength and spread from the capital to Corfu and Crete, Thessaloniki in the north and to cities in central Greece. The vote was another important step for Greece to avoid default (in the near term), but the EU/IMF criteria is still not fully satisfied. The leaders of the two leading parties will have to sign a document promising that they will implement the program in its entirety, regardless of who wins the election which will probably be held in April. In addition, the government will have to specify how 325 million euros of the 2012 cuts will be cut. The pressure is high. In an interview in yesterday's edition of Welt am Sonntag German Finance Minister Schäuble said that Greece must do their homework in order to be competitive, either by implementing the measures, or "by another route that we actually don't want to take". This last option, which means that Greece leaves the euro zone, is "all in the hands of the Greeks themselves". European finance ministers will meet on Wednesday to decide whether to pay out the tranche or not. The outcome of the Greek vote has led to a slight rebound in the euro, after the depreciation caused by uncertainty surrounding the Greek budget situation on Friday. The euro has also been weighed down by the downgrading of 34 Italian banks on Friday evening by Standard & Poor's, one month after the downgrading of Italy. Counting on the negative side for the dollar the consumer confidence index from the University of Michigan fell again, from 75.0 in January to 72.5 in February. Presumably this was caused by higher gasoline prices. January US retail sales are released on Tuesday. Consensus is an increase of 0.6 per cent (Reuters), after a weak December (0.1 per cent). Japanese GDP fell by 0.6 per cent q/q in Q4, more than expected (-0.3 per cent, according to Reuters). GDP has fallen in four of the last five quarters. Foreign trade and housing investments contributed negatively, while private consumption and investment rose. The former is due to a strong yen, weak external demand growth and disruptions in supplies after the floods in Thailand. Prime Minister Noda denied last night that Bank of Japan has a specific target for the yen, as was speculated last week. Interventions are rather triggered by of "disorderly and excessive" market fluctuations. This week features several Q4 GDP releases in Europe. On Wednesday, the flash estimate of euro zone GDP is expected show a 0.3 per cent q/q drop (Reuters consensus). Norway also slowed down towards the end of last year. We expect mainland GDP (released on Thursday) to have grown by 0.4 per cent q/q in the last quarter, down from 0.8 percent in Q3. The Norwegian krone continues to appreciate on a broad basis. At the moment EURNOK is trading just below 7.59, well below the established trading interval over the last six months (7.65 - 7.90). Core inflation, measured by CPI-ATE, was 1.3 percent y/y in January. This was a notch above consensus, according to Reuters (1.2 percent), but still slightly lower than Norway Bank's estimate in the Monetary Policy Report in October (1.5 per cent). The strong NOK is the strongest remaining argument for another interest rate cut at the next monetary policy meeting in March. The Riksbank's first monetary policy meeting of the year is scheduled on Thursday. As the majority of analysts we expect another cut of 25 basis points, leaving the repo rate at 1.5 per cent. Friday's manufacturing release showed that production was flat in December, but new orders increased strongly, by 8.6 per cent m/m, an encouraging sign for the open Swedish economy. Also: Bank of England releases its Inflation Report on Wednesday, which may provide signals regarding the probability of further increases in the securities purchase program. kjersti.haugland @dnb.no Yesterday's key economic events (GMT) 09:00 Norway CPI-ATE 13:30 US Trade balance 13:55 US Michigan cons. conf Today’s key economic events (GMT) 14:00 Japan BoJ meeting As of Jan Jan Feb As of Unit y/y % Bn USD Index Unit % Prior 1.0 -47.8 75.0 Prior 0.1 Poll 1.2 -48 74.5 Poll 0.1 Actual 1.3 48.8 72.5 DNB 0.1

SEK & 3m STIBOR 9.0 8.9 8.8 8.7 3-Jan
3m ra.

2.70 2.60 2.50 2.40 23-Jan 10-Feb
EURSEK

Headquarters 0021 Oslo Stranden 21

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Offices Abroad New York London Shanghai Singapore Stockholm

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Sales Oslo (+47) Equity Fixed Income FX/IR

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

55 21 95 80 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) Øystein Dørum Kjersti Haugland Ole André Kjennerud Knut A. Magnussen Camilla Viland 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 67

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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
13.02.2012

SPOT RATES AND FORECASTS
Oil spot & NOK TWI 120 116 112 108 104 100 3-Jan
NOK TWI ra.

100 98 96 94 23-Jan 10-Feb
$/b

EUR vs GBP & CHF 1.25 1.20 1.15 1.10
GBP r.a

0.85 0.84 0.83 0.82 0.81
CHF

3-Jan 23-Jan 10-Feb

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

Prior 77.67 1.318 0.837 1.209 7.583 8.796 7.433 5.756 7.411 0.863 9.061 6.678 8.595 1.162 10.511

Last 77.68 1.326 0.840 1.209 7.588 8.810 7.433 5.725 7.367 0.861 9.040 6.650 8.553 1.162 10.499

% 0.0% 0.7% 0.3% 0.0% 0.1% 0.2% 0.0% -0.5% -0.6% -0.2% -0.2% -0.4% -0.5% -0.1% -0.1%

In 1 m ...3 m 77 77 1.25 1.20 0.82 0.80 1.23 1.23 7.80 7.80 9.10 9.20 7.45 7.45 6.24 6.50 8.10 8.44 0.86 0.85 9.5 9.8 7.28 7.67 5.61 5.90 1.17 1.18 11.10 11.50

...6 m ...12 m 77 85 1.20 1.35 0.80 0.85 1.23 1.30 7.65 7.65 9.00 9.00 7.45 7.45 6.38 5.67 8.28 6.67 0.85 0.85 9.6 9.0 7.50 6.67 5.78 5.67 1.18 1.18 11.25 10.59

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

USD 1.0763 0.9989 0.9118 18.92 5.6057 1.5800 7.7543 122.35 0.2776 2.6041 0.5272 0.8367 3.1653 1.2536 29.8749

% 0.91% -0.36% -0.64% -1.38% -0.65% 0.37% -0.01% -0.44% -0.02% -0.65% -0.73% 1.17% -1.36% -0.65% -0.59%

EURSEK & OMXS 9.0 8.9 8.8 8.7 3-Jan
OMXS ra. EURSEK

550 500 450 400 350 23-Jan 10-Feb

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

NIB OR Prior 2.29 2.68 2.97 3.16 2.95 3.23 3.49 3.73

SWAP AND MONEYMARKET RATES STIBOR EURIBOR Last Prior Last Prior 2.27 2.25 2.24 0.58 2.69 2.52 2.51 1.00 3.00 2.64 2.63 1.32 3.20 2.71 2.70 1.51 2.95 1.92 1.94 1.25 3.23 2.08 2.09 1.58 3.50 2.29 2.29 1.97 3.74 2.46 2.46 2.35

Last 0.58 0.99 1.32 1.50 1.27 1.64 2.00 2.37

USD LIBOR Prior 0.25 0.51 0.76 0.90 0.67 1.09 1.56 2.04

Last 0.25 0.51 0.76 0.90 0.68 1.11 1.59 2.08

Gov. Bonds, 10y 2.00 1.75 1.50
NOK, ra.

3.00 2.50 2.00 1.50
SEK

3-Jan 23-Jan 10-Feb

10y 10y yield vs bund

NORWAY Prior Last 114.95 110.90 2.39 2.42 0.45 0.46

GOVERNMENT BONDS SWEDEN GERMANY US Prior Last Prior Last Prior 115.169 115.13 100.635 100.37 100.14063 1.88 1.87 1.94 1.96 1.98 -0.06 -0.09 0.04

Last 99.94 2.02 0.06

14 13 12 11 10

JPY and DowJones

78 77 76

3-Jan

23-Jan

75 10-Feb

In 3m … 6m … 12m

INTEREST RATE FORECASTS NORWAY SWEDEN GERMANY 3m nibor 10y swap 3m stibor 10y swap 3m euribor 10y swap 2.40 3.50 2.15 2.25 1.05 2.50 2.30 3.75 1.95 2.50 0.90 2.75 2.30 4.25 1.75 3.00 0.90 3.25

US 3m libor 10y swap 0.55 2.25 0.55 2.50 0.50 3.00

USDJPY ra. DowJones, 1000

USD and gold 1.42 1900 1.38 1800 1.34 1700 1.30 1600 1.26 1500 3-Jan 23-Jan 10-Feb
EURUSD ra. Gold

FRA NOK MAR JUN SEP DEC FRA SEK MAR JUN SEP DEC

3m 2.63 2.44 2.44 2.49 3m 2.29 1.97 1.77 1.69

Prior 2.63 2.43 2.43 2.47 Prior 2.30 1.99 1.77 1.68

chg 0.00 0.01 0.01 0.02 chg -0.01 -0.02 0.00 0.01

MISCELLANEOUS TWI Today % Stock ex. Today % NOK 94.90 0.12 Dow Jones 12,801.2 -0.7% SEK 116.67 - 0.07 Nasdaq 2,903.9 -0.8% 103.72 0.36 FTSE100 5,852.4 -0.7% EUR USD 78.71 - 0.37 Eurostoxx50 2,480.8 -1.6% GBP 80.80 - 0.1 Dax 6,693.0 -1.4% Comm. Today Last Nikkei225 8,999.2 0.0% Brent spot 119.2 119.2 Oslo 417.02 0.2% Brent 1m 118.3 117.3 Stockholm 488.90 -0.9% -0.1% Spot gold 0.0 1711.5 Copenhagen 566.94 Sources to all tables and graphics: Reuters and DNB Markets

Morning Report
13.02.2012
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