Danske Daily. Key news. Markets Overnight. Financial markets response to possible terrorist attack in Boston has been calm

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1 Investment Research General Market Conditions 16 April 2013 Danske Daily Key news Financial markets response to possible terrorist attack in Boston has been calm Commodity prices markedly lower across the board on concerns about global growth Equity markets are lower but have stabilised during Asian trade JPY markedly stronger and commodity currencies under pressure but stabilisation overnight Focus today is on ZEW, US housing starts and speeches by Draghi and FOMCmembers Markets Overnight Financial markets have responded relatively calmly to what appears to be a terrorist attack in Boston in connection with the annual Marathon. A least three people were killed in connection with two explosions and more than 100 people have been injured. Otherwise the main driver in the financial markets continues to be concern about global growth after the weaker-than-expected Q1 GDP growth in China and a weak regional manufacturing survey in the US. Commodities yesterday sold off sharply across the board with crude oil prices down and industrial metal prices down close to 3%. Gold prices plunged close to 10% as concern that central banks might cut their gold stocks added to the downward pressure on gold prices. Greece finally reached a deal with the troika (EU-commission, ECB and IMF) that paves the way for the disbursement of a EUR2.8bn aid tranche next month that has been delayed since March, see Financial Times. In the deal Greece promises to cut public payrolls and curb tax evasion. In a statement the troika said that Greece was now on track to meet its fiscal targets for this year. The US stock market closed markedly lower with S&P 500 finishing yesterday s session down 2.3%. Selling pressure accelerated in late trade on the back of the reports of a possible terrorist attack in Boston. However, we have seen stabilisation in Asian trade where US stock futures have recovered markedly. Asian stock markets are only modestly lower this morning after having recovered gradually during Asian trade. This morning Nikkei is down only 0.1% and Hong Kong s Hang Seng is down 0.6%. In the FX market JPY strengthened substantially but USD/JPY has again been moving higher in Asian trade and is only down 0.4% since market close in Europe yesterday. USD/JPY this morning is trading USD strengthened on the back of news of the attack in Boston but has again weakened in Asian trade and EUR/USD is trading largely unchanged at Commodity currencies have also recovered slightly in Asian trade. In the US bond market overall no big impact. 10-year US bond yields are down about 2bp to 1.70% since market close in Europe. Market movers today: DEM: ZEW-indicator EUR: CPI EUR: Draghi speaks in European parliament USD: Housing starts and CPI USD: Fed member speeches including Yellen and Dudley Q1 Earnings: Goldman Sachs, Intel, Yahoo IMF spring forecast 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 Senior Analyst Flemming j. Nielsen flemm@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 4 of this report.

2 Global Daily Focus today. This morning we get CPI details from the euro area and the UK as well as the German ZEW index. We expect a moderate setback in ZEW expectations reflecting that sentiment and forward-looking data have become more mixed recently. In the afternoon ECB's Draghi speaks to the European Parliament on the ECB's annual report. The US session will be interesting with the release of US inflation, housing starts, building permits and industrial production. We expect core CPI to increase by 0.2% m/m with increasing service prices as the main contributor. The fall in oil and gasoline prices is likely to influence the headline reading heavily and we believe it will come out at % m/m. Housing starts and building permits are in for an increase as housing construction tries to keep up with demand. We expect industrial production to have increased a modest 0.1%. There are also a number of potentially interesting Fed speeches (Dudley, Duke and Kocherlakota). We expect Dudley to comment on the prospects for the QE programme. This is of special interest as the minutes of the March FOMC meeting were more hawkish than expected, while the recent payrolls report should pull in the other direction. Fixed income markets. Yesterday s session once again confirmed the recent weakening in US data and supported the US fixed income markets. Yields on 10Y Treasuries closed at 1.70% and are a few basis points from this year s low. With yesterday s weak Empire Manufacturing (suggesting ISM to decline further) and the NAHB Housing Market indicator falling for the third consecutive month, we could expect the soft patch in US data to continue in the April data. We should thus expect the support to Treasuries to continue in the near future although they look technically overbought in most maturities. Although we believe that US rates will rise on a strategic horizon, we would like to see some signs of macro data shrugging off the recent weakness before considering an outright short position. Today Norway will issue NOK3bn of their 10Y bond (May-2023). We expect the auction to go well given the fact that Norwegian bonds still offer an attractive pickup to German Bunds. FX markets. Bank of Japan s aggressive monetary easing gets a lot of attention in the media this week ahead of the G20 meeting in Washington. Yesterday ECB s Mario Draghi also joined the debate saying that the increased stimulus announced by the Bank of Japan is determined by domestic policy considerations and that there is no currency war. In connection with the G20 meeting in February, members pledged not to target exchange rates for competitive reasons. At that time the statement from G20 members was interpreted as a green light for the Bank of Japan to continue with its monetary easing plans. The Bank of Japan is basically doing the same thing as both the US and the UK have done and we doubt that the G20 stance has changed much from February. Hence, the Bank of Japan will continue to ease its monetary policy in order to achieve its 2% inflation target, which will lead to a weaker yen in the longer run. Thus, while USD/JPY temporarily dipped below 96 overnight, we still look for USD/JPY to eventually break above 100 and to rise towards 110 in 12 months time. Recovery in US housing market continues Source: Reuters EcoWin US S&P500 future Fri Mon Wed Thu Fri Tue US 10y gov yield Global FX Fri Mon Wed Thu Fri Tue Scandi FX 1,0 0 0 u n it s A R H o u s in g s t a r t s EUR/USD (LHS) 1,0 0 0 u n it s A R B u ild in g p e rm its USD/JPY (RHS) Fri Mon Wed Thu Fri Tue Scandi Daily In Norway Norges Bank governor Øystein Olsen will be speaking at 11:15 CET. Otherwise no key data releases in Scandinavia today EUR/SEK (LHS) EUR/NOK (RHS) Fri Mon Wed Thu Sun April 2013

3 Key figures and events Tuesday, April 16, 2013 Period Danske Bank Consensus Previous - OTH Earnings: Coca-Cola, Goldman Sachs, Intel, Yahoo!, Johnson & Johnson 9:15 CHF Producer & Import prices m/m y/y Mar % -0.2% 0.1% 0.1% 10:30 GBP PPI - Input m/m y/y Mar -0.5% 0.4% 3.2% 2.5% 10:30 GBP PPI - Output m/m y/y Mar 0.3% % 0.8% 2.3% 10:30 GBP CPI m/m y/y Mar 0.4% 2.9% 0.7% 2.8% 11:00 DEM ZEW economic sentiment Index Apr :00 DEM ZEW current situation Index Apr :00 EUR CPI m/m y/y Mar 1.7% 1.2% 1.7% 0.4% 1.8% 11:00 EUR CPI - core y/y Mar 1.4% 1.3% 11:00 EUR ZEW economic sentiment Index Apr :15 EUR ECB announces allotment in 7-day (MRO) 11:15 NOK Speech by Øystein Olsen at LO Finans 14:00 USD Fed's Dudley (voter, dove) speaks 14:30 USD CPI m/m y/y Mar % 1.7% % 1.7% 0.7% % 14:30 USD CPI ex. food & energy m/m y/y Mar 0.2% 1.9% 0.2% % 0.2% % 14:30 USD Housing starts 1000 (m/m) Mar 927 (1.1%) 930 (1.4%) 917 (0.8%) 14:30 USD Building Permits 1000 (m/m) Mar 939 (%) 945 (0.6%) 939 (3.9%) 15:00 EUR ECB præsident Mario Draghi apeaks 15:00 OTH IMF release spring forecast in World Economic Outlook 15:15 USD Industrial production m/m Mar 0.1% 0.2% 0,.8% 15:15 USD Capacity utilization % Mar 78.4% 79.6% 18:00 USD Fed's Duke (voter, neutral) speaks 21:00 USD Fed's Yellen (voter, dove) speaks 21:30 USD Fed's Kocherlakota (non-voter, neutral) speaks Source: Bloomberg, Danske Bank Markets 3 16 April 2013

4 Today s market data: 16 April S&P500 Intraday, % STOCKS DJSTOXX50 Max 0.3 Max 0.6 OM XC Min Min OM XS OSE BX Grey line indicates closing of Danish markets DOW JONES NASDAQ 1 month -0.5% 1 month -1.7% S&P % Year-to-date 8.8% Year-to-date 3.6% NIKKEI (07:30) % FX & COMMODITIES EUR 17:00 07:30 +/- USD : JPY day Max ## GBP month Min ## NOK Year-t-date SEK DKK CRB C R B, R aw PLN JPY day month 1.19 GBP month Year-to-date CHF Year-t-date YIELDS & INTEREST RATES USD-Yields Intraday Spread, P o licy R ate 3M bp 17:00 07:30 +/-, bp 1.75 USD2Y USD10Y USD USD 10Y Max 0.3 Max 1.8 EUR USD 30Y Min 0.2 Min GBP JPY 10Y DKK SEK :30(-1)* 17:00 +/-, bp USD2Y (lhs) EUR/USD Intraday USD10Y (rhs) Eurostoxx Intraday, % Grey line indicates opening of US markets :30 Close Close NOK DEM 10Y PLN DKK 10Y Go ld, $ 1M future % -0.7% -1.5% +/- +/- -1.8% -2.4% -2.3% Oil, B rent, $ Industrials SEK 10Y NOK 10Y PLN 10Y * As of closing previous trading day 10Y Yield Spread to Germany USDJPYGBPFRF ITL DKKSEKNOKPLN US Yield Curve ## M ax ## M ax ### 0.8 ## M in ## 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) C redit spread, it raxx s. 11* 07:30 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) :30(-1)* 17:00 +/ EUR 10Y DKK 10Y Finan. Sr SEK 10Y Apr May Jul Aug Oct Nov Jan Feb Apr Finan. Sub 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 +/- +/ April 2013

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