Danske Daily. Market movers today. Selected market news. Markets will continue to digest the outlook for Fed tapering.

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1 Investment Research General Market Conditions 21 June 2013 Danske Daily Market movers today Markets will continue to digest the outlook for Fed tapering. There are no key figures of significance today. Selected market news The US stock markets took a beating yesterday and all major indices dropped more than 2%. Worries about scaling back of monetary easing in the US and increasing tensions in the Chinese money markets continue to spook investors. This morning most Asian stock markets are trading in red but the losses are somewhat smaller than in the US. It looks like the Nikkei is holding up slightly better than the other Asian markets as it is only down around %. While Fed worries had an impact on market sentiment, it is also clear that Chinese fears play a major role in the market downturn. It is particularly the distress in the Chinese money markets combined with Chinese growth fears that worry investors. Yesterday the Chinese one-day repurchase rate rose to close to 14% on fears of tightening of Chinese liquidity conditions. That is hardly good news for Chinese growth. In the currency markets the risk off trade dominates Emerging Markets currencies continue to be under pressure, while the dollar has surged. At the same time commodity prices continue to drop. In the fixed income markets the story is still the same and especially US bond yields continue to rise. It is also notable that higher US yields are pushing up Japanese and European bond yields. 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 1 day +/-,% S&P500 (close) S&P500 fut (chng from close) Nikkei Hang Seng :00 +/-, 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 Selected readings from Danske Bank EMEA Weekly, week 26 Chief Analyst Lars Christensen larch@danskebank.dk Important disclosures and certifications are contained from page 5 of this report.

2 Scandi markets today NOK suffered badly yesterday as Norges Bank came out much softer than expected. Norges Bank now sees a 50% probability (previously 40%) of a rate cut at the September meeting and the rate path for 2024 was lowered significantly. It pushed the Norwegian 2y swap rate down by approximately 10bp and EUR/NOK moved more than 25 big figures higher during the day. The cross is currently trading at The strong moves underline that Norges Bank took the market by surprise and positioning was for higher rates and a stronger NOK. Even though we argue that Norges Bank has become too pessimistic on both the Norwegian and the international economy and that risk is probably tilted to the upside for global rates, domestic inflation, wage growth and towards a weaker NOK than assumed by Norges bank, we are a bit reluctant to go against yesterday s moves. The market can easily price a higher probability of a rate cut in September. Bear in mind that the SEP13 3M FRA at 1.68 could drop further as NIBOR 3M would fix around if we indeed see a new rate cut. Furthermore, we might still see speculative positions being closed due to the strong moves. Hence, short-term EUR/NOK might move towards 8.00 but on a medium to longer-term horizon we still forecast that EUR/NOK will trade well below the current level as we do not expect in the end to see a Norwegian rate cut and as Norwegian growth is still expected to outperform the eurozone. Short term NOK might also be exposed to the fact that commodity currencies in general are struggling in the aftermath of the Fed tapering and as more and more investors including ourselves are questioning the super cycle in commodities. The latter has weighed strongly on CAD and AUD recently, whereas NOK until yesterday had been relative immune. EUR/SEK has also moved higher as the Norges Bank s new rate path underlined that the Riksbank might be next in line to surprise the market even after the positive SEK news earlier this week. Given that the Swedish market is closed today due to mid-summer celebrations, some erratic moves in the Swedish krona could be seen and risk is tilted to the upside for EUR/SEK. Remember though, that the state s sale of the Nordea shares announced earlier this week will be settled on Tuesday. The latter might still give some support to SEK. US S&P500 future Wed Fri Mon Tue Thu Fri US 10y gov yield Global FX Wed Thu Mon Tue Wed Fri EUR/USD (LHS) USD/JPY (RHS) Wed Thu Mon Tue Wed Fri Fixed Income markets The selling pressure on the fixed income markets continued yesterday on the back of the re-pricing of Fed. 10yr Treasury yields are currently testing major support around %. The USD OIS market is now pricing he first Fed funds hike to % in March As such this is fair and perhaps even slightly on the aggressive side. This could be a valid argument for the current support to hold but with positioning still bad, we are not certain whether the market is ready for stabilisation yet. The Euro market has been hit with bunds yielding close to the high in January and peripheral bond markets being under pressure as carry trades are being scaled back. Even the front-end of the EUR curve has seen major losses. Today there is not much on the calendar but the price action could be interesting in itself, as we are looking for signs of stabilisation across fixed income markets. The ECB is publishing repayment data for the 3Y LTRO. We wonder if the recent volatility in the markets and peripherals in particular will affect the banks decision to return money. Scandi FX EUR/SEK (LHS) EUR/NOK (RHS) Wed Thu Mon Tue Wed FX markets The FX market has over the past 24 hours continued to trade on the more hawkish Fed stance and Chinese worries and especially high yielders and domestic troubled currencies like TRY, ZAR and BRL continue to suffer. The sell-off might look overdone from a fundamental perspective but as a lot of stops are triggered at the moment more weakness 2 21 June 2013

3 certainly cannot be ruled out. G10 high yielders like AUD, NZD and CAD remain under pressure as well, as the first cyclical - and not risk-off driven - upturn for the US dollar is in the making. Key figures and events Friday, June 21, 2013 Period Danske Bank Consensus Previous 9:00 EUR ECOFIN meeting 10:00 EUR Current account EUR bn Apr :30 GBP Public Finances (PSNCR) GBP bn May :00 EUR ECB announces 3-year LTRO repayment 14:30 CAD CPI m/m y/y May 0.4% 0.9% -0.2% 0.4% 14:30 CAD Retail sales m/m Apr 0.2% % Source: Bloomberg, Danske Bank Markets 3 21 June 2013

4 Today s market data: 21 June STOCKS DJSTOXX50 Max 0.3 Max -0.9 OM XC Min -2.9 Min -3.6 OM XS OSE BX Grey line indicates closing of Danish markets S&P500 Intraday, % DOW JONES NASDAQ 1 month -4.9% 1 month -9.0% S&P % Year-to-date 11.4% Year-to-date % NIKKEI () % FX & COMMODITIES EUR 17:00 +/- USD JPY day Max ## GBP month Min ## NOK Year-t-date SEK DKK CRB C R B, R aw PLN JPY day month 3.27 GBP month Year-to-date 0.40 CHF Year-t-date YIELDS & INTEREST RATES USD-Yields Intraday Spread, 0.35 P o licy R ate 3M bp 17:00 +/-, bp 2.46 USD2Y USD10Y USD USD 10Y Max 0.4 Max 2.43 EUR USD 30Y Min 0.3 Min 2.3 GBP JPY 10Y DKK SEK (-1)* 17:00 +/-, bp NOK DEM 10Y USD2Y (lhs) EUR/USD Intraday USD10Y (rhs) Eurostoxx Intraday, % Grey line indicates opening of US markets Close Close Go ld, $ M future PLN DKK 10Y % -3.1% -1.2% +/- +/- -2.3% -2.3% -% Oil, B rent, $ 109 Industrials SEK 10Y NOK 10Y PLN 10Y * As of closing previous trading day Y 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) (left axis) 1 month ago (left axis) German Yield Curve DEM2Y DEM5YR DEM10Y D-t-D +/-, bp (right axis) (left axis) 1 month ago (left axis) C redit spread, it raxx s. 11* 1 day 1 month Non-finan Credit spreads USD 10Y * Ask price ** Ask price Swap Spread, bp** Europe (IG) JPY 10Y HiVol Xover (N-IG) (-1)* 17:00 +/ EUR 10Y DKK 10Y Finan. Sr SEK 10Y Jun Aug Sep Nov Dec Feb Mar May Jun Finan. Sub NOK 10Y itraxx Europe (IG) (left axis) itraxx Xover (Non IG) (right axis) :00 * As of closing previous trading day USD 17:00 +/- +/ June 2013

5 Disclosure This research report has been prepared by Danske Bank Markets, a division of Danske Bank A/S ( Danske Bank ). Analyst certification Each research analyst responsible for the content of this research report certifies that the views expressed in the research report accurately reflect the research analyst s personal view about the financial instruments and issuers covered by the research report. Each responsible research analyst further certifies that no part of the compensation of the research analyst was, is or will be, directly or indirectly, related to the specific recommendations expressed in the research report. Regulation Danske Bank is authorised and subject to regulation by the Danish Financial Supervisory Authority and is subject to the rules and regulation of the relevant regulators in all other jurisdictions where it conducts business. Danske Bank is subject to limited regulation by the Financial Services Authority (UK). Details on the extent of the regulation by the Financial Services Authority are available from Danske Bank upon request. The research reports of Danske Bank are prepared in accordance with the Danish Society of Financial Analysts rules of ethics and the recommendations of the Danish Securities Dealers Association. Conflicts of interest Danske Bank has established procedures to prevent conflicts of interest and to ensure the provision of highquality research based on research objectivity and independence. These procedures are documented in Danske Bank s research policies. Employees within Danske Bank s Research Departments have been instructed that any request that might impair the objectivity and independence of research shall be referred to Research Management and the Compliance Department. Danske Bank s Research Departments are organised independently from and do not report to other business areas within Danske Bank. Research analysts are remunerated in part based on the overall profitability of Danske Bank, which includes investment banking revenues, but do not receive bonuses or other remuneration linked to specific corporate finance or debt capital transactions. Financial models and/or methodology used in this research report Calculations and presentations in this research report are based on standard econometric tools and methodology as well as publicly available statistics for each individual security, issuer and/or country. Documentation can be obtained from the authors upon request. Risk warning Major risks connected with recommendations or opinions in this research report, including as sensitivity analysis of relevant assumptions, are stated throughout the text. Expected updates Danske Daily is updated on a daily basis. First date of publication Please see the front page of this research report for the first date of publication. Price-related data is calculated using the closing price from the day before publication June 2013

6 General disclaimer This research has been prepared by Danske Bank Markets (a division of Danske Bank A/S). It is provided for informational purposes only. It does not constitute or form part of, and shall under no circumstances be considered as, an offer to sell or a solicitation of an offer to purchase or sell any relevant financial instruments (i.e. financial instruments mentioned herein or other financial instruments of any issuer mentioned herein and/or options, warrants, rights or other interests with respect to any such financial instruments) ( Relevant Financial Instruments ). The research report has been prepared independently and solely on the basis of publicly available information that Danske Bank considers to be reliable. While reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and Danske Bank, its affiliates and subsidiaries accept no liability whatsoever for any direct or consequential loss, including without limitation any loss of profits, arising from reliance on this research report. The opinions expressed herein are the opinions of the research analysts responsible for the research report and reflect their judgement as of the date hereof. These opinions are subject to change, and Danske Bank does not undertake to notify any recipient of this research report of any such change nor of any other changes related to the information provided in this research report. This research report is not intended for retail customers in the United Kingdom or the United States. This research report is protected by copyright and is intended solely for the designated addressee. It may not be reproduced or distributed, in whole or in part, by any recipient for any purpose without Danske Bank s prior written consent. Disclaimer related to distribution in the United States This research report is distributed in the United States by Danske Markets Inc., a U.S. registered broker-dealer and subsidiary of Danske Bank, pursuant to SEC Rule 15a-6 and related interpretations issued by the U.S. Securities and Exchange Commission. The research report is intended for distribution in the United States solely to "U.S. institutional investors" as defined in SEC Rule 15a-6. Danske Markets Inc. accepts responsibility for this research report in connection with distribution in the United States solely to U.S. institutional investors. Danske Bank is not subject to U.S. rules with regard to the preparation of research reports and the independence of research analysts. In addition, the research analysts of Danske Bank who have prepared this research report are not registered or qualified as research analysts with the NYSE or FINRA, but satisfy the applicable requirements of a non-u.s. jurisdiction. Any U.S. investor recipient of this research report who wishes to purchase or sell any Relevant Financial Instrument may do so only by contacting Danske Markets Inc. directly and should be aware that investing in non- U.S. financial instruments may entail certain risks. Financial instruments of non-u.s. issuers may not be registered with the U.S. Securities and Exchange Commission and may not be subject to the reporting and auditing standards of the U.S. Securities and Exchange Commission June 2013

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