Investment Research General Market Conditions 1 December Weakening Nordic housing markets in focus

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1 Investment Research General Market Conditions December 207 Weekly Focus Sweden Weakening Nordic housing markets in focus Market movers ahead In the US, we expect to see a catching up effect for non-farm payrolls in November. We expect an increase of 95,000 driven mainly by the service sector. Brexit remains in the spotlight, as the EU says an agreement on phase must be reached on Monday at the latest in order to assess whether sufficient progress has been made in the negotiations phase to move to phase 2 (future relationship). In all Scandinavian countries, we have interesting data out on housing markets. Sweden and Norway in particular draw our attention following recent weakening. We expect to see declining house prices in both countries. In Norges Bank s regional survey, we expect to see the aggregated output index unchanged at around.. Contents Market movers... 2 Global Macro and Market Themes... 5 Scandi Update... 9 Latest research from Danske Bank Markets... 0 Macroeconomic forecast... Financial forecast... 2 Calendar... 3 Global macro and market themes Financial views US curve flattening continues; and we look at possible explanations. We believe the factors that have driven the flattening, including expected market pricing of more Fed hikes in 208, in a low inflation environment will continue to flatten the US curve over the next couple of quarters. Major indices 0-Dec 3M 2M 0yr EUR swap EUR/USD ICE Brent oil Dec 6M 2-24M Source: Danske Bank Follow us on Employment growth slowing Tighter labour market suggests growth above trend Sources: BLS, Macrobond Financial Source: Macrobond Financial, Danske Bank Editor Analyst Bjørn Tangaa Sillemann bjsi@danskebank.dk Important disclosures and certifications are contained from page 5 of this report.

2 Market movers Global In the US, the jobs report for November is due for release on Friday. Several indicators (particularly PMI employment index) point towards a solid jobs report although it delivered several figures below what could be expected based on other indicators this year. We expect a catching up effect for November driven by the service sector. Hence, we estimate non-farm payrolls increased 95,000 in November with services the main contributor. We estimate average hourly earnings increased in line with trend of 0.2% m/m (2.6% y/y vs. 2.4% y/y in October) and an unchanged unemployment rate. Besides the jobs report on Friday, there are no other market movers on the agenda in the coming week. In the euro area, we are facing a thin week in terms of market movers. The only release of interest is the euro area third GDP estimate for Q3 on Tuesday. The second estimate showed solid growth of 0.6% q/q in Q3 and we do not expect any significant revisions to the GDP figure in the third estimate. However, the third estimate will also contain the main aggregates. We expect to see consumption continuing to drive growth in the euro area, but judging from the country figures already released, also expect to see solid growth in investments and exports, as exports should not yet have been hurt by the euro appreciation during Q2 and early Q3. Employment growth slowing Sources: BLS, Macrobond Financial Consumption and investments will also drive growth in Q3 In the UK, the most important release is the PMI service index on Tuesday. Both Lloyd s Business Barometer and the UK service confidence indicator from the EU suggest a fall, so we expect a correction down to 54.5 in November although both indicators actually suggest a bigger fall. Brexit remains in the spotlight, as the EU says an agreement on phase (divorce bill, Irish border and citizens rights) must be reached on Monday at the latest, otherwise the EU leaders do not have enough time to prepare for a decision on whether there has been sufficient progress in the negotiations phase to move to phase 2 (future relationship). As the UK and the EU seem have agreed on the divorce bill, the main obstacle is now to find a solution to the Irish border issue. According to EU officials, the probability of an agreement before the EU summit is 50/50. Overall, the negotiations are moving forward and the negotiation environment seems better now that PM Theresa May has taken over from Brexit Secretary David Davis. Notice that the next EU summit does not take place before March. It is a quiet week in China. The main releases are FX reserves and the trade balance. FX reserves should increase a bit from the October level of USD3,09bn as a weaker USD during November has increased the value of non-usd FX reserves when measured in USD. The trade data are quite volatile but we expect to continue to see a picture of fairly robust export growth and some moderation in import growth, with the latter reflecting a moderate slowdown in domestic investment demand due to tightening towards the housing market. Source: Eurostat, Macrobond Financial Service confidence has fallen suggesting PMI services should as well Source: IHS Markit, EU, Macrobond Financial Chinese exports benefiting from a strong global economy Source: Markit, Macrobond Financial, Danske Bank 2 December 207

3 Next week in Japan, we get October total cash earnings on Friday. It is crucial for the Bank of Japan that cash earnings begin to pick up in order to get the economy less dependent on the global economic recovery and more driven by domestic private demand. Earnings growth is still weak though, and with inflation picking up due to rising energy prices, real wage growth currently stands around zero, which is not supportive of private consumption. Earnings growth still low Source: Japanese Ministry of Labour, Japanese Statistics Bureau, Macrobond Financial Scandi In Denmark, the week kicks off with currency reserves data for November on Monday. The EUR/DKK cross has been up at for most of November and thus some way off the levels where the Nationalbank intervened in February and March this year. The bank has presumably therefore not felt any need to intervene for an eighth successive month, the longest period without intervention since early 204. Wednesday brings housing prices for September and bankruptcies and repossessions for November, while Statistics Denmark s industrial production data for October round off the week on Thursday. In Sweden, industrial orders and production and service production for October will give clues to how Q4 growth started out. With the ongoing recovery in the global economy we expect these data to look fine. There is also data for household consumption, which should show some moderation given the weak retail sales number already released. Statistics Sweden also releases single-dwelling house prices for November; a decline seems likely given the information we already have. The Swedish financial stability council meets, a joint committee with members from the Riksbank, Ministry of Finance, FSA and the Debt Office, where views are exchanged, but no decisions taken. The Debt Office releases the November borrowing requirement. October showed a SEK6.7bn surplus compared to the DO s forecast of a SEK5.8bn deficit, i.e. SEK2.5bn better than expected, almost all due to higher tax revenues. The DO expects a SEK8.7bn surplus for November, a correction of the surprise revenue inflow in October does not seem unlikely. DKK has been strong against EUR Source: Statistics Denmark Business doing fine Source: Statistics Sweden In Norway, the regional survey from Norges Bank will be published on Tuesday. This is Norges Bank s preferred measure of economic activity, and the aggregated output index (for the next six months) has shown a clear upswing in recent quarters, despite a minor correction in August. Going by recent data, it seems that the growth outlook supports our view of continued above-trend growth. However, there are some increasing uncertainties regarding the housing market, so we expect the index to stay around.. This should be neutral for Norges Bank based on its September forecast for GDP growth of 0.6 % q/q for the rest of the year. In addition, we are also very interested in firms take on capacity constraints. To our mind, recent reports from the regional network have indicated that capacity utilisation in the Norwegian economy is a fair bit higher than Norges Bank s estimates of the output gap would suggest. This is supported by the fact that both unemployment measures currently are falling more rapidly than Norges Bank expected in September. Tighter labour market suggests growth above trend Source: Macrobond Financial, Danske Bank 3 December 207

4 Housing prices pulled a surprise in October, gaining 0.4% m/m after falling for six months solid. Turnover is holding up well even in Oslo, which indicates not only that the drop in prices is mainly a supply-side issue, but also that prices are actually clearing the market. The number of properties on the market is still rising, but somewhat more slowly than before, which means that the inventory-to-sales ratio was a bit lower in October. However, due to an extra transaction day, we suspect this to exaggerate the sales -component. These levels still suggest that the decline in housing prices is not yet over. We expect prices in November to drop close to 0.5 % m/m, hence fuelling the downside risks from a possible housing market driven recession. Market movers ahead Global movers Event Period Danske Consensus Previous Tue 05-Dec 0:30 GBP PMI services Index Nov :00 EUR GDP, final q/q y/y 3rd quarter 0.6% 2.5% 0.6% 2.5% Thurs 07-Dec - CNY Foreign exchange reserves USD bn Nov Fri 08-Dec - CNY Trade balance USD bn Nov :00 JPY Labour cash earnings y/y Oct 0.8% 0.9% 4:30 USD Unemployment % Nov 4.% 4.% 4.% 4:30 USD Average hourly earnings, non-farm m/m y/y Nov 0.2% 2.6% 0.3% 2.7% 0.0% 2.4% 4:30 USD Non farm payrolls 000 Nov Scandi movers Mon 04-Dec 6:00 DKK Currency reserves DKK bn Nov Tue 05-Dec - SEK Swedish Financial stability council meets 0:00 NOK Norges Bank Regional Network Report: Output next Index Nov.. :00 NOK Housing prices m/m Nov -0.5% 0.4% Thurs 07-Dec 8:00 NOK Manufacturing production m/m y/y Oct 2.6%.2% 9:30 SEK Household consumption m/m y/y Oct 0.6% 3.5% 9:30 SEK Average house prices SEK m Nov 2.97 Source: Bloomberg, Danske Bank Markets 4 December 207

5 Global Macro and Market Themes Bond yield conundrum vol. 2 The big US curve flattening The big theme in the US fixed income market is the flattening of the yield curve where long yields have dropped, despite rate hikes by the Fed. This week the spread between 2Y and 0Y bonds reached 58bp, the lowest level in 0 years. We have to go back to 2007, when Fed Funds were 5.25% and the Fed was about to start an easing cycle to see a narrower spread. The flattening in 207 is reminiscent of the experience when the Fed hiked 7 times and the curve still flattened by 250bp. This development was famously named the bond yield conundrum by Federal Reserve Chairman Greenspan in his February testimony, as he rejected a variety of possible explanations such as a savings glut in Asia, lower inflation expectations and a weaker growth outlook. Bond yield conundrum vol. 2? Today s key points US curve flattening continues; and we look at possible explanations. We believe the factors that have driven the flattening, including expected market pricing of more Fed hikes in 208, in a low inflation environment will continue to flatten the US curve over the next couple of quarters. Bond yield conundrum vol. 2? % Source: Macrobond Financial, Danske Bank Curve today compared to six months ago, US treasury curve 3.50% US Govt, zero coupon 3.00% Source: Macrobond Financial New Bond yield conundrum vol. 2? No, this time it is different! Researchers and market participants have this year once again started to discuss if we are facing a new bond yield conundrum. We think that this time it is different using another infamous term and argue that this time we actually have plausible explanations for the continued flattening of the US yields despite the Fed rate hikes and the reduction of the Fed s balance sheet (quantitative tightening). 2.50% 2.00%.50%.00% Today -6M Source: Danske Bank 5 December 207

6 One important reason why the US yield curve in our view has flattened is related to the drop in both current inflation and not least inflation expectations. Current inflation has continued to undershoot, and since the peak right after the election of Trump the 5y5y inflation swap has dropped 25bp.We actually saw in the Fed Minutes last week that the FOMC has become increasingly concerned about this development. We can also point to the ongoing discussion of the real equilibrium rate (normal level for Fed Funds) or r-star. Several model estimations of r-star point to a very low level at the moment and given the market attention to r-star, we might have seen the market lowering its estimates for the development in r-star. We have also seen FOMC lowering its longer run federal funds rate several times over the past couple of years as shown in the graph below. Demographics and lower neutral growth rates are the main reasons behind lower r- star estimations. Market inflation expectations are low, 5y5y USD inflation, % Source: Macrobond Financial Low estimates for neutral-rate or r-star have become the new normal Source: Danske Bank, Macrobond Financial Term premium is low and well below the conundrum level, % We can also point to the so-called term-premium, which is the residual of the yield level that cannot be explained by inflation expectations and expectations of future short-term rates. Hence, it is the extra premium an investor demands to invest e.g. in a 0Y bond instead of ten Y bonds over the next ten years. The term-premium is not measurable directly in the market, but model estimates are close to -50bp for a 0Y US yield today. Hence, the investor is actually prepared to receive a negative term-premium today. The search for yield we have seen in the market, as a consequence of low short-rates and low volatility, is probably one explanation behind the low and negative term-premium. Another reason why we have a negative term-premium in the US is undoubtedly the record low long yield levels in other core markets such as Germany and Japan. It forces investors to the high yielding US Treasury market and compresses the term-premium further. In the US bond yield conundrum was among other things explained by the savingsglut in Asia. Today, it is the QE and the forward guidance and yield control (0Y Japanese yields are actively kept close to zero by the Bank of Japan) from the ECB and BoJ that keeps the US term-premium low. The graph to the right shows how Japan has been a net buyer of US Treasuries for the last four years. The savings glut has been replaced by investors being squeezed out of local markets by central banks conducting QE. Source: Macrobond Financials Japanese net purchase of US Treasuries Source: Macrobond Financial 6 December 207

7 The low volatility environment and the apparent high predictability of central banks may also induce more risk-taking, forcing investors further out on the curve and adding downward pressure on yields. The use of US treasury bonds to hedge risky assets has also been mentioned as an explanatory factor. When the value of the equity market goes up the need for bonds as a hedge also goes up, it has been argued, breaking the usual inverse relationship between equity and bond prices. Does the flattening curve signal a weaker growth outlook and the Fed being ahead of the curve? Finally, it cannot be ruled out that the market is simply pricing in a more negative outlook for the US economy and henceforth a too tight US monetary policy taking both rate hikes and QT into account basically finding that the Federal reserve is ahead of the curve. As the graph below shows, an inversion of the yield-curve (here 0Y - Fed Funds) has often predicted a forthcoming recession. If this is the case the flattening of the yield-curve is a worrying sign for the US economy. It is not our main case that the flattening of the curve points to a forthcoming US recession or slowdown in the US economy, but instead that it reflect the factors we have discussed in this article. If the flattening continues, it may create concerns that the bond market is predicting a new recession in the US Source: Danske Bank, Macrobond Financial We see room for further flattening of the US curve The flattening of the US curve 2y0y has been remarkable so far in 207. We believe the factors that have driven the flattening, including expected market pricing of more Fed hikes in 208, in a low inflation environment will continue to flatten the US curve over the next couple of quarters. Even as the curve continues to flatten we expect foreign demand to stay intact for now. 7 December 207

8 Financial views Asset class Equitie s Positive on equities on 3-6 month horizon. The correction is over. Main factors Positive on equities on 3-6 month horizon due to strong business cycle and near double digit earnings growth in most major regions Bond market German/Scandi yields set to stay in recent range for now, higher on 2M horizon EU curve 2Y0Y set to steepen when long yields rise again. Flattening of US 2Y0Y curve to continue US- euro spread set to widen marginally Peripheral spreads tightening but still some factors to watch Inflation set to stay subdued despite decent growth. Stronger euro keeps euro inflation outlook down. ECB to normalise gradually only, due to lack of wage pressure and stronger euro. ECB on hold for a long time. The ECB keeps a tight leash on the short end of the curve. With 0Y yields stable, the curve should change little on a 3-6M horizon. Risk is skewed towards a steeper curve but that is a 6M to 2M forecast. The Fed's QT programme (balance sheet reduction) is set to happen at a very gradual pace and the effect on the Treasury market should be benign. Yet, market pricing for Fed hikes is relatively dovish and yields should edge higher on a 2M horizon. We expect economic recovery, ECB stimuli, better fundamentals, particularly in Portugal and Spain, an improved political picture and rating upgrades to lead to further tightening despite the recent strong moves. Italy is the big risk factor but it is very expensive to be short Italian bonds. FX EUR/USD consolidating near term but upside risks in 208 EUR/USD to be rangebound near term. We still see the cross moving firmly into mid-.20s supported by valuation and debt- flow reversal in 208. EUR/GBP upside risks remain but GBP to strengthen eventually We still see EUR/GBP within in coming months as Brexit risk premium is likely to persist despite progress in negotiations. Longer term, GBP could strengthen. USD/JPY gradually higher longer term but challenged near term Policy normalisation at the Fed and eventually at the ECB, while the Bank of Japan is staying dovish, means support for EUR/JPY and USD/JPY alike on a 2M horizon. EUR/SEK range near term, gradually lower further out Gradually lower in the longer term on fundamentals but near term SEK potential is limited by relative rates as SEK remains high- beta ECB derivative via the Riksbank. EUR/NOK upside risks in Q4 persist, then gradually lower NOK headwinds near term due to positioning, oil price and rates potential but longer term we expect the NOK to rebound on valuation, growth and real- rate differentials. Commodities Oil price rising volatility Metal prices to fall back Gold price range- bound Agriculturals trending higher Geopolitical tensions around Saudi Arabia and Iran on the rise. Concerns about implications of unstable Venezuelan debt situation. Sentiment is turning negative again, as Chinese construction activity set to slow. Tighter supply to cap lower bound. Tug of war between safe- haven demand from rising global geopolitical tensions and negative impact of hawkish Federal Reserve. Weather- related supply concerns supporting prices. Source: Danske Bank 8 December 207

9 Scandi Update Denmark negative growth in Q3 due to temporary factors The latest figures from Statistics Denmark show GDP falling 0.6% in Q3, more than suggested by its GDP indicator a fortnight ago. Although this is a relatively big drop, we cannot conclude that the economic upturn is over quite the opposite. The decrease was due mainly to firms cutting back their stocks to the extent that this alone pulled output down by 0.8%. Without this destocking, we would have seen positive growth in the economy in Q3. We therefore expect growth to bounce back strongly in Q4 as firms stocks are no longer able to accommodate demand. The week also brought the business tendency surveys for November. The confidence indicators were again in good shape, with a rise in the service indicator, and sentiment in manufacturing, retail and construction still at relatively high levels. The unemployment figures for October showed a decrease of 700 people, giving an unchanged jobless rate of 4.3%. Thus unemployment continued its recent decline, painting the picture of a labour market that is improving further. GDP fell in Q3 Source: Statistics Denmark Sweden slowing GDP and stricter amortisation Swedish Q3 GDP turned slightly weaker than expected at 2.9 % y/y, while Q and Q2 were also revised down marginally. Private and public consumption growth slowed while net exports added negatively to growth. Gross fixed investments grew strongly, however, both residential and machinery & equipment. Housing in decline Property prices have continued to drop in November, possibly at an accelerating pace. Q3 saw the first drop in residential permits in many years, suggesting 208 GDP growth will be hit by a decline in residential construction and making risk scenarios more probable. The Swedish government said yes to the FSA s stricter amortisation requirement which requires new borrowers with loans in excess of 450% of gross income to add another % in amortisation. This comes on top of the requirements imposed in mid-206 on new loans. The new requirement will only affect about % of the total stock of mortgage loans. Hence, the most important effect is probably psychological. If anything, it is likely to add to the recent downward pressure on property prices. Source: KTH-Valueguard, Statistics Sweden Norway disappointing retail data, what now? Retail sales were a major disappointment, falling 0.2% m/m in October, the third successive month of decline. For one thing, this means that growth in private consumption will be lower in Q4 than we had anticipated, posing a downside risk to our GDP forecast. For another, weaker spending growth will fan the flames for those who fear that the fall in housing prices will hit the real economy hard. In a nutshell, a weaker housing market will impact on the economy through two channels: (i) lower housing investment and (ii) increased saving as a result of lower housing wealth (the wealth effect) and so lower growth in private consumption. Whenever we see weaker retail sales, fears of this latter effect will mount. The results of Norges Bank s regional network survey (see Market movers) will therefore be more important than usual. Private consumption trending down again Source: Macrobond Financial, Danske Bank 9 December 207

10 Latest research from Danske Bank 30/ Flash Comment International: OPEC+ extends cuts - June review frets market OPEC+ agreed to extend output cuts by 9M with Libya and Nigeria joining the deal, which is set to be reviewed in June. The oil market was left disappointed by the risk of OPEC+ ending cuts prematurely by mid-next year. 0 December 207

11 Macroeconomic forecast Macro forecast, Scandinavia Year GDP cons. Private cons. Fixed inv. Stock build. 2 Exports Imports Inflation Unemploym. 3 budget 4 debt 4 Current acc. 4 Denmark Sweden Norway Macro forecast, Euroland Year GDP cons. Private cons. Fixed inv. Stock build. 2 Exports Imports Inflation Unemploym. 3 budget 4 debt 4 Current acc. 4 Euroland Germany France Italy Spain Finland Macro forecast, Global Year GDP Private cons. cons. Fixed inv. Stock build. 2 Exports Imports Inflation Unemploym. 3 budget 4 debt 4 Current acc. 4 USA China UK Source: OECD and Danske Bank. ) % y/y. 2) % contribution to GDP growth. 3) % of labour force. 4) % of GDP. December 207

12 Sweden Financial forecast Bond and money markets Source: Danske Bank Currency vs USD Currency vssek USD 0-Dec m m m EUR 0-Dec m m m JPY 0-Dec m m m GBP 0-Dec m m m CHF 0-Dec m m m DKK 0-Dec m m m SEK 0-Dec m m m NOK 0-Dec m m m Commodities Key int. rate 3m interest rate 2-yr swap yield 0-yr swap yield Currency vs EUR Average 0-Dec Q Q2 Q3 Q4 Q Q2 Q3 Q NYMEX WTI ICE Brent Copper 6,762 5,855 5,670 6,383 6,250 6,250 6,250 6,00 6,00 6,040 6,75 Zinc 3,56 2,789 2,580 2,96 2,900 2,800 2,700 2,600 2,500 2,808 2,650 Nickel,0 0,32 9,230 0,594 0,000 0,500 0,750,000,000 0,036 0,83 Aluminium 2,048,858,90 2,027,950,900,875,850,825,936,863 Gold,275,29,260,279,250,250,250,250,250,252,250 Matif Mill Wheat Rapeseed CBOT Wheat CBOT Soybeans 987, ,000,025,050, ,03 2 December 207

13 Calendar Key Data and Events in Week 49 During the week Period Danske Bank Consensus Previous Monday, December 4, 207 Period Danske Bank Consensus Previous 6:00 JPY Consumer confidence Index Nov :30 GBP PMI construction Index Nov :30 EUR Sentix Investor Confidence Index Dec :00 EUR PPI m/m y/y Oct 2.6% 0.3% 2.9% 0.6% 6:00 USD Core capital goods orders, final % Oct -0.5% 6:00 DKK Currency reserves DKK bn Nov Tuesday, December 5, 207 Period Danske Bank Consensus Previous - SEK Swedish Financial stability council meets - PLN Polish central bank rate decision %.50%.50%.50% :30 JPY Markit PMI services Index Nov :45 CNY Caixin PMI service Index Nov 5.2 4:30 AUD Reserve Bank of Australia rate decision %.50%.50%.50% 8:30 SEK PMI services Index Nov 6.4 9:5 ESP PMI services, preliminary Index Nov :30 SEK Industrial production s.a. m/m y/y Oct 9:30 SEK Service production m/m y/y Oct 9:30 SEK Industrial orders m/m y/y Oct 4.7%.2% 9:45 ITL PMI services, preliminary Index Nov :50 FRF PMI services, final Index Nov :55 DEM PMI services, final Index Nov :00 EUR PMI composite, final Index Nov :00 EUR PMI services, final Index Nov :00 NOK Norges Bank Regional Network Report: Output next 6M Index Nov.. 0:30 GBP PMI services Index Nov :00 NOK Housing prices m/m Nov -0.5% 0.4% :00 EUR Retail sales m/m y/y Oct -0.7%.4% 0.7% 3.7% :00 EUR GDP, final q/q y/y 3rd quarter 0.6% 2.5% 0.6% 2.5% :00 EUR Gross fixed investments q/q 3rd quarter 2.0% :00 EUR Government consumption q/q 3rd quarter 0.5% :00 EUR Private consumption q/q 3rd quarter 0.5% 3:30 SEK Swedish Financial stability council press conference 4:30 USD Trade balance USD bn Oct :45 USD Markit PMI service, final Index Nov :00 USD ISM non-manufacturing Index Nov Source: Danske Bank 3 December 207

14 Calendar (continued) Wednesday, December 6, 207 Period Danske Bank Consensus Previous :30 AUD GDP q/q y/y 3rd quarter 0.7% 3.0% 0.8%.8% 8:00 DEM Factory orders m/m y/y Oct -0.% 7.0%.0% 9.5% 8:00 DKK House and apartment prices m/m y/y Sep 8:00 DKK Forced sales (s.a.) Number Nov 8:00 DKK Bankruptcies (s.a.) Number Nov 9:5 CHF CPI m/m y/y Nov 0.0% 0.8% 0.% 0.7% :30 EUR ECB's Mersch speaks in Frankfurt 4:5 USD ADP employment 000 Nov :30 USD Unit labour cost, final q/q 3rd quarter 0.3% 0.5% 6:00 CAD Bank of Canada rate decision %.0%.0%.0% 6:30 USD DOE U.S. crude oil inventories K Thursday, December 7, 207 Period Danske Bank Consensus Previous - CNY Foreign exchange reserves USD bn Nov :00 JPY Leading economic index, preliminary Index Oct :45 CHF Unemployment % Nov 3.% 3.% 8:00 DKK Industrial production m/m Oct -4.2% 8:00 NOK Manufacturing production m/m y/y Oct 2.6%.2% 8:00 NOK Industrial production m/m y/y Oct -0.5% 2.3% 8:00 DEM Industrial production m/m y/y Oct.0% 4.3% -.6% 3.6% 9:00 CHF SNB balance sheet, intervention CHF bn Nov :30 SEK Household consumption m/m y/y Oct 0.6% 3.5% 9:30 SEK Average house prices SEK m Nov :30 SEK Budget balance SEK bn Nov 6.7 4:30 USD Initial jobless claims :00 EUR ECB's Draghi speaks in Frankfurt 2:00 USD Consumer credit USD bn Oct Friday, December 8, 207 Period Danske Bank Consensus Previous - EUR S&P may publish Estonia's debt rating - CNY Trade balance USD bn Nov :50 JPY GDP deflator, final y/y 3rd quarter 0.% 0.% 0:50 JPY GDP, final q/q ann. 3rd quarter 0.4%.5% 0.3%.4% :00 JPY Labour cash earnings y/y Oct 0.8% 0.9% 8:00 DEM Trade balance EUR bn Oct :00 DEM Labour costs q/q y/y 3rd quarter 0.3% 2.3% 8:45 FRF Industrial production m/m y/y Oct -0.2% 2.8% 0.6% 3.2% 0:30 GBP Construction output m/m y/y Oct -0.%.5% -.6%.% 0:30 GBP Industrial production m/m y/y Oct -0.% 3.5% 0.7% 2.5% 0:30 GBP Manufacturing production m/m y/y Oct -0.2% 3.5% 0.7% 2.7% 0:30 GBP Trade balance GBP mio. Oct :00 GBP NIESR GDP estimate q/q Nov 0.5% 4:30 USD Unemployment % Nov 4.% 4.% 4.% 4:30 USD Average hourly earnings, non-farm m/m y/y Nov 0.2% 2.6% 0.3% 2.7% 0.0% 2.4% 4:30 USD Non farm payrolls 000 Nov :00 USD University of Michigan Confidence, preliminary Index Dec The editors do not guarantee the accurateness of figures, hours or dates stated above For furher information, call (+45 ) Source: Danske Bank 4 December 207

15 Disclosures This research report has been prepared by Danske Bank A/S ( Danske Bank ). The author of this research report is Bjørn Tangaa Sillemann, Analyst. 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 Conduct Authority and the Prudential Regulation Authority (UK). Details on the extent of the regulation by the Financial Conduct Authority and the Prudential Regulation Authority are available from Danske Bank on request. Danske Bank s research reports are prepared in accordance with 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 high-quality 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 on 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. Date of first publication See the front page of this research report for the date of first publication. General disclaimer This research report has been prepared by Danske Bank (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 herein. This research report is not intended for, and may not be redistributed to, 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. 5 December 207

16 Disclaimer related to distribution in the United States This research report was created by Danske Bank A/S and is distributed in the United States by Danske Markets Inc., a U.S. registered broker-dealer and subsidiary of Danske Bank A/A, pursuant to SEC Rule 5a-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 5a-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. Report completed: December 207, 2:45 GMT Report first disseminated: December 207, 3:00 GMT 6 December 207