Investment Research General Market Conditions Monday, 20 August 2012

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1 Investment Research General Market Conditions Monday, 20 August 202 Danske Daily Key news The ECB appears to consider setting limits on sovereign yields by pledging unlimited bond purchases German politicians warn Greece to stay on the reform path and not to expect a third rescue package Chinese new house prices rose in 49 out of 70 cities in July, the highest share in 4 months Market movers today: No major releases today Chicago Fed National Activity Index Market overview 07:30 day +/-,% Markets Overnight The positive sentiment continued in Friday s US session after Spanish 0-year government bond yields fell to a six-week low. This morning has been more downbeat. Germany s Spiegel magazine wrote that the ECB is considering setting limits on yields of euro area sovereign debt by pledging unlimited bond purchases and said that the policy will be decided at the September Governing Council meeting. Such a promise could be an important step towards regaining investor confidence but the question is whether it can be seen as compatible with the EU Treaty s prohibition of monetary financing of government debt. According to the Wall Street Journal the Spanish Finance Minister said that the Spanish government would like to see ECB commit to substantial open-ended sovereign debt purchases before it asks for help. During the weekend several German politicians warned Greece to stay on the reform path and argued against a third rescue package. German Finance Minister Schäuble said on Saturday that it is not responsible to throw money down a bottomless pit". In China new house prices rose in 49 out of 70 cities in July, the highest share in 4 months, indicating that interest rate cuts and incentives for first-time buyers have had a positive effect. The FT writes that the Norwegian Oil fund will take on more risk and the head of asset management in Norway s finance ministry is quoted for saying that the fund can exploit [its nature as a long-term investor] by being a provider of liquidity in periods when there is a lack of liquidity. S&P500 (close) 48,2 0,9 S&P500 fut (chng from close) 44,9-2 Nikkei 966,7 5 Hang Seng 9964,8-0,75 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. Source: Bloomberg 7:00 07:30 +/-, bp US 2y gov 0,28 0,29 0,8 US 0y gov,80,8,2 itraxx Europe (IG) ,5 itraxx Xover (Non IG) ,6 +/-, % EUR/USD,23,233 0,7 USD/JPY 79,490 79,480 - EUR/CHF,20,20 0 EUR/GBP 0,785 0,786 0,6 EUR/SEK 8,255 8,28-0,45 EUR/NOK 7,3 7,29-0,28 USD Oil Brent, USD 3,6 4,3 0,57 Gold, USD 65,8 68,9 0,9 The rally in US equity markets continued Friday with both Dow Jones and S&P 500 rising 0.9%. Nasdaq rose 0.46% and the VIX volatility index hit a five-year low. In this morning s Asian session Chinese stocks fell to the lowest level since 2009 on concerns that the central bank may not ease monetary policy. The Nikkei index shows small losses this morning. Several Asian markets, including Singapore and India, are closed today. US bond yields rose slightly in Friday s US session before closing with 0-year yields just above.8%. This morning opened flat. In the FX markets EUR/USD strengthened slightly on Friday after European market close. This morning it trades in a range from.232 to.235. Senior Economist Frank Øland Hansen franh@danskebank.dk Important disclosures and certifications are contained from page 4 of this report.

2 Global Daily Focus today: There are no data of importance today and hence markets will continue to trade on general risk appetite with comments regarding the situation in Spain and Greece continuing to be in focus. Later this week focus turns to the minutes from the latest FOMC meeting and preliminary PMI data for the euro area. Fixed income markets: The positive sentiment was extended on Friday, as Spain and Italy tightened further to Germany on increased optimism about a possible future intervention from the ECB. In a very thin day data-wise, the sentiment in the Southern European bond markets will remain the key driver for the general market. Apparently an article in German Spiegel Magazine suggested that one of the options the ECB is considering is a cap on short-end bond yields. This is unconfirmed and highly uncertain but it is the kind of news flow that could fuel the positive market sentiment at the current juncture. Elsewhere today markets will focus on more important events later this week including flash PMIs and FOMC minutes. FX markets: The lack of key events means that the FX market will trade on news regarding Spain and Greece. In general we still look for an temporary upside for EUR/USD the next couple of months as the great policy response (see our FX trends publication for more info) is expected to trigger a significant unwinding of long EUR/USD positions. The latest IMM data published on Friday showed that speculators continued to unwind long dollar-positions against GBP, AUD and CAD but importantly not against EUR. In fact, the market added to short speculative EUR/USD positions in the week ending 7 August. Hence, if Spain asks for help and ECB starts buying bonds in the secondary markets as we expect, the potential for a relief rally in EUR/USD should be in place. Chicago Fed National Activity Index 3 Index IFO Source: Reuters EcoWin US S&P500 future US 0y gov yield Chicago Fed National Activity Index to fr ma on to ma,87,77,87,77 Scandi Daily,67,67 No major market events in Scandinavia today.,57,57 Key figures and events Monday, August 20, 202 Period Danske Bank Consensus Previous 4:30 USD Chicago Fed National Activity Index Index Jul -0.5 Global FX EUR/USD (LHS) USD/JPY (RHS) Source: Bloomberg and Danske Markets,244,234 79,9 79,3 78,7,224 78, Scandi FX 8,33 EUR/SEK (LHS) EUR/NOK (RHS) 8,29 8,25 8,2 7,37 7,33 7,29 8,7 7,25 2 Monday, 20 August 202

3 Today s market data: 20 August 202 AKTIER DJSTOXX ,3% Max 0,5 0,30 0,30 Max 0,8 0,30 OM XC ,6% Min -0,3 Min -0,5 OM XS30 09,2% 0,0 0 0,4 OSE BX 440 % -0, DOW JONES NASDAQ +/- Lukkekurs +/- måned 4,% måned 5,3% S&P År-til-dato 2,8% År-til-dato 8,7% NIKKEI (07:30) 967 0,3% VALUTA & RÅVARER EUR kurs 7:00 07:30 +/- USD 23,09 23,30 0,2 07:30 JPY 79,49 79,48 - måned -9 9,36 måned,73 GBP 56,89 56,9 2 År-t-dato -,82 År-til-dato -6,3 CHF 97,58 97,42-0,6 * Graf en viser 07:30-23:00 f re og 23:00 søn t il 07:30 man. Lukkekurs USD-renter intradag Ledende 3M Spænd, bp 7:00 07:30 +/-, bp 0,3 USD2Y USD0Y USD 0,25 0,43 8 USD 0Y,80,8 Max 0,3 Max,9,84 EUR 0,75 0,33-42 USD 30Y 2,9 2,93 2 0,30Min 0,3 Min,8 GBP 0,50 0,70 20 JPY 0Y 0,84 0,84 0 0,82 0,29 DKK 0,20 0,3 SEK, :30(-)* 7:00 +/-, bp 0,28,80 NOK, DEM 0Y,54,50-5 PLN 4,75 5,0 26 DKK 0Y,27,23-4 0,27, SEK 0Y,5,52 NOK 0Y 2,0 2,0 0 USD2Y (v.a.) USD0Y (h.a.) PLN 0Y 4,96 4,94-2 * Grafen viser 07:30-23:00 fre og 23:00 søn til 07:30 man. * lukkekurs seneste handelsdag ## M ax 0,580 -, ## M ax ### 0,6 ## M in -2,30 0,4 ## M in ### Olie, B rent, $ JPY 97,84 97,99 0,5 dag 2,80 0,55 23,7 23,7 Max ## GBP 78,46 78,58 0,2 måned 34,35 7,43 23,4Min ## 23,4 NOK 73,35 729,33-2 År-t-dato 55,5 6,88 0,3 SEK 825,47 82,79-3,68 C R B, M C R B, 23, 23, DKK 744,59 744,6 2 future råindustri 5,0 4,0 3,0 0,50 0,30 0,0 0,345 S&P500 intradag, % Grå linie indikerer hvornår det danske marked lukker 22, årigt rentespænd til Tyskland 4,29 0,638 0,76 EUR/USD intradag 0, ,50-0,30 5,0 3,446 4,0 3,0 - USD JPY GBP FRF ITL DKK SEK NOK PLN -0,263-0,653-0,70 Eurostoxx intradag, % -0,50-0, Grå linie indikerer hvor det amerikanske marked åbner RENTER Guld, $ 68,85 PLN 407,2 407,39 0,8 07:30 303,48 22,8 USD kurs 7:00 07:30 +/- dag 0,8,6,4,2 0,8 0,6 0,4 0,2 Rentekurve USA 0,70 0,4-0, -0,6 -,6-2, USD2Y USD5Y USD0Y D-t-D +/-, bp (højre akse) 07:30 (venstre akse) måned siden (venstre akse),8,6,4,2 0,8 Rentekurve Tyskland 0,2% 0,5% 0,2% 4,26 509,40,7-7,44 0,5-0,5 -,5-2,5-3,5 0,2-4,5-5,5 DEM2Y DEM5YR DEM0Y D-t-D +/-, bp (højre akse) 07:30 (venstre akse) måned siden (venstre akse) Kreditspænd it raxx s. * Kreditspænd Swapspænd, bp** :00 07:30 +/- 07:30 dag måned USD 0Y 0 Europe (IG) JPY 0Y HiVol Xover (N IG) :30(-)* 7:00 +/- 300 EUR 0Y DKK 0Y Finan. Sr SEK 0Y Finan. Sub aug okt nov jan feb apr maj jul NOK 0Y Non-finan itraxx Europe (IG) (venstre akse) itraxx Xover (Non IG) (højre akse) * lukkekurs seneste handelsdag * Ask pris ** Ask pris 3 Monday, 20 August 202

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