Investment Research General Market Conditions 4 September 2013 Danske Daily Market movers today We expect no change to the final euro area service PMI, but look for some upside surprise in service PMI for Spain and Italy compared with consensus expectations. Market overview 07:30 1 day +/-,% In terms of the second release of euro area GDP for Q2, it will be interesting to see the underlying components showing us to what extent growth was driven by domestic or foreign demand. We will also get data for July euro area retail sales. In the US, the trade deficit is expected to widen again after a significant narrowing in June. Monthly trade data are usually volatile and we expect some of the large gain in exports and drop in imports to be reversed in July. ECB s Asmussen will give a speech this morning ahead of the ECB meeting tomorrow. Asmussen attracted some attention last week, when he said that there could be a potential policy decision this week. He might be asked to elaborate on that statement if he takes questions following his speech. In the US, Fed s Williams (non-voter) will hold a speech on the economy and monetary policy tonight. Further, the Fed will release its Beige Book which will provide information about the state of the economy in the 12 US Federal Reserve Districts. Finally, we expect Bank of Canada to leave its overnight target rate at %; any changes to the BoC s long-standing tightening bias would be a surprise. Selected market news US stock markets opened higher in a catch-up after being closed for Labor Day, but then slid during the session as congressional support for military strikes on Syria appeared to gather momentum and only closed marginally up on the day despite the positive surprise from US manufacturing ISM which managed to improve further after a jump in July with new orders as high as 63.2. The republican speaker, John Boehner, said that he will back the president s call to action and Obama also won the support of other leading congressional Republicans at a meeting with them yesterday. The increased likelihood of a US military strike sent oil and gold prices higher while the improving economic situation weighed on treasuries. EUR/USD is trading around the lowest level in seven weeks. French president François Hollande is now opening the door for a parliamentary vote on military action in Syria though the constitution only obliges him to inform parliament. This morning Asian stock markets are trading in negative territory on profit taking and Syria. A few positive data releases have been supportive for market sentiment. S&P500 (close) 1639,8 0,42 S&P500 fut (chng from close) 1641,5 0,15 Nikkei 13963,6-0,11 Hang Seng 22308,4-0,39 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 shows 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 17:00 07:30 +/-, bp US 2y gov 0,42 0,42-0,4 US 10y gov 2,90 2,87-2,2 itraxx Europe (IG) 105 106 0,5 itraxx Xover (Non IG) 420 422 1,8 +/-, % EUR/USD 1,316 1,317 0,05 USD/JPY 99,800 99,700-0,10 EUR/CHF 1,23 1,23 0,03 EUR/GBP 0,847 0,846-0,17 EUR/SEK 8,709 8,717 0,09 EUR/NOK 8,00 8,00-0,01 USD Oil Brent, USD 114,9 115,7 0,70 Gold, USD 1402,0 1412,5 0,75 Selected readings from Danske Bank Pent-up demand in investments could boost euro area growth ECB Preview: Keep the powder dry HSBC/Markit PMI for China increased to the highest level in five months (52.8 in August from 51.3 in July) in yet another confirmation that the Chinese economy is picking up some momentum though the employment subindex was below 50. Australian GDP increased more than expected by 0.6% q/q in Q2 following % q/q growth in Q1 which lifted AUD/USD to the highest level in two weeks. Senior Analyst Frank Øland +45 45 12 85 26 franh@danskebank.dk Important disclosures and certifications are contained from page 4 of this report.
Scandi markets today No important key figures in Scandinavia today. Fixed Income markets Following the strong US ISM print yesterday, both 10Y Treasuries and Bunds tested the recent highs in yields but did not manage to sell through those levels. Perhaps because focus returned to the conflict in Syria, as Congressional support for a strike is becoming more likely. If the European service PMI improves today, it could add some further intraday headwinds to the core bond markets given the current momentum for higher yields. Potentially more important is the speech from the ECB s Asmussen. However, we doubt he would front-run Draghi by hinting at a policy decision only one day ahead of the ECB meeting. Most likely the markets will trade cautiously in anticipation of the ECB meeting tomorrow and due to the event risk related to Syria. In the fixed income markets, Germany will print a new 5Y benchmark today. This segment of the curve ended yesterday s session at the highest yield level since the spring 2012. Among the Nordics, Sweden will tap SEK3.5bn in the Nov-23. Sweden is trading close to highs versus Bunds, which should help attract interest. However, we are somewhat concerned that the current environment is not particularly favourable for immediate performance on the back the recent strong Swedish data. FX markets EUR/USD continued to trade lower yesterday despite improved risk sentiment. The move lower in EUR/USD indicates that the cross is currently trading on whether or not the Fed will start its tapering this month. Hence, near-term risks still look skewed to the downside for EUR/USD as a September tapering, in our view, looks very likely and as trading accounts, according to the latest IMM data, are speculatively long EUR at the moment. EUR/NOK dropped below 8.00 yesterday for the first time in two weeks a on a day where NOK and SEK gained support from a positive risk environment. In Sweden today s release of services PMI is not expected to trigger any significant market reaction. The services PMI is a relatively new indicator and still has to prove itself in terms of forecasting ability. Hence, it will probably be a wait-and-see mode in the Scandi FX market today ahead of the Riksbank meeting tomorrow. Key figures and events Wednesday, September 4, 2013 Period Danske Bank Consensus Previous - EUR ECB's Asmussen speaks in Frankfurt 3:30 AUD GDP q/q y/y 2nd quarter 0.6% % 0.6% % 3:45 CNY HSBC/Markit services PMI Index Aug 51.3 8:30 SEK PMI services Index Aug 56.6 9:00 DKK House price index q/q y/y Jun % 3.3% 9:15 ESP PMI services m/m y/y Aug 50.7 48.5 9:45 ITL PMI services Index Aug 51.6 48.7 9:50 FRF PMI services, final Index Aug 47.7 47.7 9:55 DEM PMI services, final Index Aug 52.4 52.4 52.4 10:00 EUR PMI services, final Index Aug 5 5 5 10:00 EUR PMI composite, final Index Aug 51.7 51.7 51.7 10:30 GBP PMI services Index Aug 59.7 60.2 11:00 EUR GDP, 2nd release q/q y/y 2nd quarter 0.3% 0.3% -0.7% 0.3% -0.7% 11:00 EUR Retail sales m/m y/y Jul -0.3% 0.4% -0.3% -% -0.9% 11:00 EUR ECB announces allotment in 7-day (USD) 11:00 EUR Household consumption, preliminary q/q 2nd quarter 0.2% % 11:00 EUR Gross fixed capital investments q/q 2nd quarter -0.2% -1.9% 11:00 EUR Government expenditure, preliminary q/q 2nd quarter -0.1% -0.2% 13:00 USD MBA Mortgage Applications 14:30 USD Trade balance USD bn Jul -38.7-34.2 16:00 CAD Bank of Canada rate decision % 0% 0% 0% 18:30 USD Fed's Williams (non-voter, dove) speaks 20:00 USD Fed's Beige Book 23:00 USD Total Vehicle Sales m Aug 15.80 15.73 US S&P500 future 1665 1665 1655 1655 1645 1645 1635 1635 1625 1625 Mon Tue Wed Fri Mon Wed US 10y gov yield 2.95 2.95 2.85 2.85 2.75 2.75 2.65 2.65 Mon Tue Wed Thu Tue Wed Global FX EUR/USD (LHS) USD/JPY (RHS) 100.4 1.344 99.5 1.334 98.6 1.324 97.7 1.314 96.8 Mon Tue Thu Fri Mon Wed Scandi FX EUR/SEK (LHS) EUR/NOK (RHS) 8.14 8.77 8.10 8.73 8.06 8.69 8.02 8.65 7.98 Mon Tue Thu Fri Mon Source: Bloomberg and Danske Bank Markets 2 4 September 2013
Today s market data: 04 September 2013 1.20 0.70 DJSTOXX50 2703-0,6% Max 1,4 0.30 Max 0,8 0.3 OM XC20 556-1,0% Min -0,3 0.70 Min -1,2 OM XS30 1239 0,6% 0,5 - -0.2 0,5 OSE BX 503 0,1% -0.30 15 16 17 18 19 20 21 Grey line indicates closing of Danish markets DOW JONES NASDAQ 1 month -4,1% 1 month -1,2% S&P500 1640 Year-to-date 15,0% Year-to-date 4,9% NIKKEI (07:30) 13964-0,6% EUR 17:00 07:30 +/- 131.9 131.9 USD 131,59 131,65 0,06 07:30 1412,49 115,73 JPY 131,33 131,26-0,07 1 day 0,07 0,05 Max ## GBP 84,72 84,58-0,14 1 month 100,74 6,78 131.7 131.7 Min ## NOK 799,90 799,79-0,11 Year-t-date -262,86 4,62 0,2 SEK 870,93 871,71 0,78 13 13 DKK 745,95 745,90-0,05 CRB C R B, R aw PLN 427,57 427,30-0,27 JPY 99,80 99,70-0,10 1 day 1,63 1 month -0,93 GBP 155,33 155,67 0,34 1 month 9,02 Year-to-date -0,28 CHF 93,76 93,75-0,01 Year-t-date -2,22 USD-Yields Intraday Spread, 0.44 P o licy R ate 3M bp 17:00 07:30 +/-, bp 2.92 USD2Y USD10Y USD 0,25 0,26 1 USD 10Y 2,90 2,87-2 0.43Max 0,4 Max 2,9 2.89 EUR 0,50 0,23-28 USD 30Y 3,82 3,80-2 Min 0,4 Min 2,8 GBP 0,50 0,52 2 JPY 10Y 0,75 0,77 2 0.42 0 0 2.86 DKK 0,20 0,28 8 0.41 S&P500 Intraday, % 0.40 07 10 13 16 19 22 01 04 USD2Y (lhs) EUR/USD Intraday 131.3 07 10 13 16 19 22 01 04 USD10Y (rhs) 1.20-0.30 131.3 2.83 2.80 0.80-0.70 SEK STOCKS Eurostoxx Intraday, % -1.20-1.2 09 10 11 12 13 14 15 16 17 18 Grey line indicates opening of US markets FX & COMMODITIES YIELDS & INTEREST RATES 1,00 1,22 22 0.8-0.7 07:30 07:30(-1)* Close Close 14834 NOK 1,50 1,71 21 DEM 10Y 1,90 1,95 5 PLN 2,50 2,60 10 DKK 10Y 2,11 2,15 4 3613 Go ld, $ 1M future 292,79 17:00 +/- +/- 0,2% 0,6% 0,4% Oil, B rent, $ Industrials 521,49-0,37 +/-, bp SEK 10Y 2,52 2,58 6 NOK 10Y 3,16 3,16 0 0,93-8,91 PLN 10Y 4,49 4,66 16 * As of closing previous trading day 0.93 - - 10Y Yield Spread to Germany 2.72 2.41-1.17 0.94 8 0.64 1.22 USDJPYGBPFRF ITL DKKSEKNOKPLN - - - - US Yield Curve 4.0 3.5 ## M ax 4,430 ## M ax ### ## M in 0,000 0.8 ## M in ### USD2Y USD5Y USD10Y D-t-D +/-, bp (right axis) 07:30 (left axis) 1 month ago (left axis) 1.8 1.6 1.4 1.2 0.6 0.4 0.2 German Yield Curve DEM2Y DEM5YR DEM10Y D-t-D +/-, bp (right axis) 07:30 (left axis) 1 month ago (left axis) 4.0 3.5 USD 17:00 07:30 +/- C redit spread, it raxx s. 11* Credit spreads Swap Spread, bp** 160 700 17:00 07:30 +/- 07:30 1 day 1 month 140 600 USD 10Y Europe (IG) 106 1 11 120 500 JPY 10Y 19 18-1 100 HiVol 159 0 10 400 80 Xover (N-IG) 422 2 28 300 07:30(-1)* 17:00 +/- 60 40 20 200 100 EUR 10Y DKK 10Y 0 31 30-1 Finan. Sr. 145 0 10 0 0 SEK 10Y 41 40-1 Finan. Sub. 219-2 7 Sep Oct Dec Jan Mar Apr Jun Jul Sep NOK 10Y 44 41-3 Non-finan. 23 0-5 itraxx Europe (IG) (left axis) itraxx Xover (Non IG) (right axis) * Ask price ** Ask price * As of closing previous trading day 3 4 September 2013
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