Danske Daily. Market Movers. Selected Market News

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1 Investment Research General Market Conditions 26 June 2015 Danske Daily Market Movers The ongoing negotiations between the Greek government and the creditor institutions continue to be in focus as no deal was reached yesterday. Today s EU leaders summit previously seemed to be the deadline for reaching a deal but another Eurogroup meeting has been confirmed on Saturday and the deadline has thus been moved into the weekend. In terms of data releases euro-area money supply and bank lending should continue to improve as the ECB s liquidity boost is finding its way through to private consumption and investments. The monetary easing is also reflected in lower cost of borrowing. The recent sell-off in the fixed income markets has not yet affected lending rates, hence the impact on economic activity should be limited. In the US the final June University of Michigan consumer confidence is likely to show a modest further improvement in the last weeks of June. Swedish figures and Riksbank board meeting today. For more on Scandi markets see page 2. Selected Market News With the new deadline for a Greek deal now set to be the Eurogroup meeting on Saturday we are in for a wait-and-see day where markets could stay nervous and, similar to yesterday, react erratically to the news flow and any headlines from the negotiations between Greece and the institutions. Outstanding issues now appear to centre on pension-reform issues, sales-tax increases and whether debt relief should be granted. We still believe an accord will be reached in time and it seems that the differences have narrowed recently. That said, the fact that a deal will likely not be reached until Saturday at the earliest makes it difficult for the Greek government to pass legislation before market open on Monday and thus for national parliaments to approve the deal before payments due by month end. This makes the ECB s decision on Emergency Liquidity Assistance (ELA) to Greek banks key in order to avoid bank runs and having to impose capital controls. That said, a missed IMF payment is unlikely to be characterised as a default by rating agencies and should thus not trigger a series of credit events as such. As a result, markets could start eyeing 20 July when Greece is due to pay EUR3.5bn to the ECB as a next deadline: if missed, this would most certainly imply ELA be withdrawn. Asian equities have extended losses seen in the US session and US Treasury yields are marginally higher tracking the uptick in the German Bund rate yesterday. Japanese data on inflation and household spending were mixed overnight but national CPI figures notably came in on the strong side and USD/JPY edged lower. Market overview Note: * The itraxx Europe Index shows 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. ***The Markit CDX North America Investment Grade Index shows the spread development for the most liquid investment grade CDS contracts in the US credit market. Source: Bloomberg Selected readings from Danske Bank Today Nordic Outlook - June 2015 [Tex Senior Analyst Christin Tuxen tux@danskebank.dk 07:30 1 day +/-,% S&P500 (close) S&P500 fut (chng from close) Nikkei Hang Seng :00 07:30 +/-, bp US 2y gov US 10y gov itraxx Europe (IG) itraxx Xover (Non IG) /-, % EUR/USD USD/JPY EUR/CHF EUR/GBP EUR/SEK EUR/NOK USD Oil Brent, USD Gold, USD Important disclosures and certifications are contained from page 6 of this report.

2 Scandi Markets Three figures out this morning in Sweden, all relating to May: 1) trade balance is expected to show a minor retracement - printing a surplus of SEK3.5bn - in a fairly strong upward trend, 2) household lending growth should continue to strike new highs, we estimate 6.6% y/y and 3) retail sales growth is likely to rebound somewhat to around 4.5% y/y. Overall, this should paint a nice picture of the most important sectors of the Swedish economy. Fixed Income Markets Fixed income markets continue to be caught in the Greek-deal-limbo and today is unlikely to be any different. We have experienced that timelines and deadlines are moving targets but it seems like a crescendo is building up for the Eurogroup meeting on Saturday. A lot has already been priced-in the periphery but the positive sentiment should extend further on a final agreement, even though some details are expected to remain open until an eventual implementation in parliaments. Nonetheless, we expect Bunds to test lows on an agreement before we expect it to edge a bit higher as technicals support the FI markets over the summer. Norges Bank will publish its Q3 issuance strategy today. We might see a downward revision of issuance in H2 15 after the revised budget showed a lower funding need of NOK23bn. We remain long NGB '21 against Germany. FX Markets EUR crosses have in general been remarkably stable in recent days considering the political turmoil in relation to Greece. EUR/USD has fallen below the 1.12 level again but overall it appears that FX markets are sidelined on the single currency with markets waiting for the imminent Greek issue to get out of the way in order to clear the way for policy differences to play out yet again. Indeed, we believe that any rally in EUR/USD on a Greek accord will prove short-lived as this would at the same time open the door for the Fed to hike rates. US S&P500 future Wed Thu Fri Tue Wed US 10y gov yield Wed Thu Mon Tue Wed Fri Global FX EUR/USD (LHS) USD/JPY (RHS) Wed Thu Mon Tue Wed Fri A batch of Swedish figures due out this morning but SEK will keep an eye on the Riksbank with an executive board meeting scheduled for today. However, with no solution for Greece likely ahead of the weekend, the Riksbank will probably be sidelined for now; that said, any drop in EUR/SEK on a Greek blow-up would certainly trigger a Riksbank reaction (rate cut and/or QE extension). Scandi FX EUR/SEK (LHS) EUR/NOK (RHS) Wed Thu Mon Tue Wed Fri 2 26 June

3 Key figures and events Friday, June 26, 2015 Period Danske Bank Consensus Previous - EUR Moody's may publish Belgium's debt rating - EUR Moody's may publish Germany's debt rating - EUR S&P may publish France's debt rating - EUR Moody's may publish Austria's debt rating - EUR EU summit in Brussels 0:45 NZD Trade balance NZD M May M 1:30 JPY CPI - national ex. fresh food y/y May 0.1% % 0.3% 1:30 JPY CPI - national ex. fresh food and energy y/y May 0.4% 0.4% 1:30 JPY CPI- Tokyo y/y Jun % % 1:30 JPY CPI - Tokyo ex fresh food y/y Jun 0.1% 0.2% 1:30 JPY Household spending y/y May 3.6% -1.3% 1:30 JPY Unemployment rate % May 3.3% 3.3% 3.3% 1:30 JPY Job-to-applicant ratio May :30 JPY CPI - national y/y May 0.4% 0.6% 9:00 SEK Sweden's Riksbank Executive Board meeting 9:30 SEK Retail sales s.a. m/m y/y May 0.3% 4.5% -0.2% 3.0% 9:30 SEK Household lending % May 6.6% 6.5% 9:30 SEK Trade balance SEK bn May :00 EUR Money supply (M3) y/y May 5.4% 5.4% 5.3% 10:00 EUR Loans to Households (adj. for sales and sec.) y/y May 1.5% 1.4% 1.3% 10:00 EUR Loans to NFCs (adj. for sales and sec.) y/y May 0.1% % 10:00 ITL Business confidence Index Jun :00 USD University of Michigan Confidence, final Index Jun Source: Bloomberg, Danske Bank Markets 3 26 June

4 Today s market data: 26 June STOCKS DJSTOXX % Max 0.7 Max 0.8 OM XC % Min - Min -1.1 OM XS % OSE BX 644 -% S&P500 Intraday, % DOW JONES Grey line indicates closing of Danish markets NASDAQ 5112 Grey line indicates opening of US markets 1 month -0.1% 1 month -1.6% S&P Year-to-date 2.1% Year-to-date 13.9% NIKKEI (07:30) % EUR/USD Intraday FX & COMMODITIES EUR 17:00 07:30 +/- USD :30 JPY day Max ## GBP month Min ## NOK Year-t-date SEK DKK PLN JPY day month 3.12 GBP month 2.62 Year-to-date CHF Year-t-date YIELDS & INTEREST RATES Go ld, $ USD-Yields Intraday Spread, P o licy R ate 3M bp 17:00 07:30 +/-, bp 0.72 USD2Y USD10Y 2.42 USD USD 10Y Max 0.7 Max 2.4 EUR USD 30Y Min 0.7 Min 2.4 USD2Y 2.40 GBP JPY 10Y (lhs) 0 0 DKK USD10Y (rhs) 2.38 SEK :30(-1)* 17:00 +/-, bp NOK DEM 10Y Eurostoxx Intraday, % :30 Close Close CRB 1M future PLN DKK 10Y /- +/- -0.4% -0.2% -0.3% Oil, B rent, $ Industrials SEK 10Y NOK 10Y PLN 10Y * As of closing previous trading day 6.13 C R B, R aw 10Y Yield Spread to Germany USDJPYGBPFRF ITL DKKSEKNOKPLN US Yield Curve ## M ax ## M ax ### ## M in 00 ## M in ### USD2Y USD5Y USD10Y D-t-D +/-, bp (right axis) 07:30 (left axis) 1 month ago (left axis) German Yield Curve DEM2Y DEM5YR DEM10Y D-t-D +/-, bp (right axis) 07:30 (left axis) 1 month ago (left axis) Non-finan. C redit spread, it raxx s. 11* 07:30 Source: Bloomberg, Danske Bank Markets 1 day 1 month Credit spreads USD 10Y * Ask price ** Ask price Swap Spread, bp** Europe (IG) JPY 10Y HiVol Xover (N-IG) :30(-1)* 17:00 +/ EUR 10Y DKK 10Y Finan. Sr SEK 10Y Finan. Sub Jun Aug Sep Nov Dec Feb Mar May Jun NOK 10Y itraxx Europe (IG) (left axis) itraxx Xover (Non IG) (right axis) :00 07:30 * As of closing previous trading day USD 17:00 07:30 +/- +/ June

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