Morning Report

07.11.2012

Obama won the election

NOK & 3m NIBOR 7.50 7.45 7.40 7.35 7.30
3m ra.

President Barack Obama secured victory in the night's U.S. presidential election. Candidate Mitt Romney has already congratulated Obama with the victory.
2.00 1.95 1.90 1.85 1.80

27-Sep 17-Oc t 6-Nov

EURNOK

The votes are still being counted, but Obama has already secured a majority in the U.S. presidential election. In the U.S. electoral system each state has a certain amount of electoral votes based on state population. Victory requires at least 270 electoral votes. Obama has already received 290 electoral votes and thus has secured victory. 17 December electoral votes formally select president. In theory they are free, but in practice all electoral votes in a state go to the winner in the state. The election was also a Senate election and the Democrats retained their majority in the Senate. Republicans lost seats in Indiana, Massachusetts and Main and the Democrats managed to hold on to crucial seats in Virginia and Missouri. Republicans still have a majority in the House of Representatives. The new Congress (the 113th) is taken under oath 3 January next year. 6. January electoral votes will be formally counted for united Congress. 20 January starts the new presidency and the inauguration ceremony takes place on the first working day thereafter, it will now say Monday 21 January. Yesterday both European and U.S. stocks rose. In the currency markets, the euro has strengthened 0.6 percent against the dollar and 0.3 percent against the British pound. The Norwegian krone is slightly stronger against the euro since yesterday morning. Weak figures for Europe and increased concern about the situation in Greece would not suggest any increased willingness in the market to take on additional risks and one should expect the euro to weaken. One possible explanation however is that it was put forward a number of polls with Obama as the clear winner. And the clear winner is probably desired by many. There were several weak European numbers yesterday. PMI for the services sector in the euro zone fell 0.1 points to 46.0 in October, slightly lower than the flash estimate of 46.2. Several sub-indices did rise, including employment and "new business", but all indices except "input prices" are under 50. This points to further contraction in the economy. The PMI fell in both German and French service sectors, but rose in Spain and Italy. In all four countries however, the service sectors are in contraction. Especially in Spain. Composite PMI encompassing both manufacturing and service sector, fell 0.4 points to 45.7 in October. That's the lowest level since June 2009. There should be no doubt that the euro zone is in a recession. GDP fell in the 4th quarter last year, held the level in the first quarter, but fell again in the second quarter. The PMIs point towards decline in GDP of 0.3 percent in both Q3 and Q4. The European slowdown has also reached the German industry. In August, new orders fell 3.3 percent, significantly lower than the expected decline of 0.5 percent. Certainly, the figures for August were revised upwards, but it was still down 0.8 percent for the month. Both the domestic orders and export orders fell, the latter with 4.5 per cent. UK manufacturing production rose 0.1 percent from August to September. It was a bit weaker than expected, but much better than the decline of 1.1 percent in August. Manufacturing production accounts for only 15 percent of GDP, but explains almost three-quarters of the annual variations GDP. From September last year manufacturing production fell by 1.0 percent. Half of UK exports go to the euro zone. With the downturn in the euro zone, it is not surprising that British industry is struggling and the near term outlook is not so good either. Total industrial production in the UK fell as much as 1.8 percent m/m in September. This is due to a fall in oil and gas production by 20 percent. The decrease in the oil and gas production is due to closure for maintenance, which this year took place somewhat later than normal. The figures for the previous two months were therefore correspondingly high. kyrre.aamdal@dnb.no

SEK & 3m STIBOR 8.7 8.6 8.5 8.4 27-Sep 17-Oct

3m ra.

1.70 1.60 1.50 1.40 6-Nov

EURSEK

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Regional sales (+47) Bergen Bod Fredrikstad Hamar Haugesund Lillehammer Kristiansand Oslo Stavanger Troms Trondheim Tnsberg lesund

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Research Regional Sales (+47) Eirik Larsen 22 01 76 55

Research FX/IR (+47) ystein Drum Kjersti Haugland Ole Andr Kjennerud Knut A. Magnussen Camilla Viland Magne stnor Kyrre Aamdal

22 01 76 56 22 01 78 03 22 01 78 24 22 01 76 63 22 01 77 41 22 01 76 57 22 01 76 67

Credit Research (+47) Ole Einar Stokstad Mikael L. Gjerding Rolv Kristian Heitmann Thomas Larsen Knut Olav Rnningen

22 01 78 37 22 01 77 62 22 01 76 77 22 01 77 36 22 01 78 15

As of Yesterdays key economic events (GMT) 08:58 EMU PMI, total Oct 09:30 UK Industrial production Sep 11:00 Germany Industrial orders Sep As of Todays key economic events (GMT) 08:30 Sweden Minutes from meeting 25 October 10:00 EMU Retail trade Sep 11:00 Germany Goods production, prelim Sep

Unit Index m/m, % m/m, % Unit m/m % m/m %

Prior 45.8 -1.1 -1.3 Prior 0.1 -0.5

Poll 45.8 0.3 -0.5 Poll -0.1 -0.5

Actual 45.7 0.1 -3.3 DNB

Morning Report
07.11.2012

SPOT RATES AND FORECASTS

Oil spot & NOK TWI 120 115 110 105 27-Sep 17-Oc t 94 93 92 91 6-Nov
$/b

NOK TWI ra.

1.22 1.21 1.21

EUR vs GBP & CHF 0.82 0.80 0.78

1.20 0.76 27-Sep 17-Oc t 6-Nov

GBP r.a CHF

FX USDJPY EURUSD EURGBP EURCHF EURNOK EURSEK EURDKK USDNOK JPYNOK SEKNOK GBPNOK USDSEK JPYSEK NOKSEK GBPSEK

Prior 80.37 1.282 0.801 1.208 7.324 8.573 7.460 5.714 7.112 0.855 9.163 6.695 8.326 1.172 10.705

Last 80.29 1.286 0.802 1.208 7.329 8.583 7.461 5.703 7.108 0.854 9.135 6.679 8.321 1.173 10.701

% -0.1% 0.3% 0.1% 0.0% 0.1% 0.1% 0.0% -0.2% -0.1% -0.1% -0.3% -0.3% -0.1% 0.1% 0.0%

In 1 m ...3 m 78 76 1.27 1.20 0.80 0.78 1.20 1.20 7.30 7.25 8.55 8.55 7.45 7.45 5.75 6.04 7.37 7.95 0.85 0.85 9.1 9.3 6.73 7.13 5.25 5.42 1.17 1.18 10.69 10.96

...6 m ...12 m 76 78 1.20 1.25 0.78 0.80 1.20 1.20 7.25 7.40 8.50 8.60 7.45 7.45 6.04 5.92 7.95 7.59 0.85 0.86 9.3 9.3 7.08 6.88 5.38 5.37 1.17 1.16 10.90 10.75

FX AUD CAD CHF CZK DKK GBP HKD ISK KWD LTL LVL NZD PLN SGD RUB

USD 1.0473 0.9890 0.9400 19.68 5.8038 1.6023 7.7508 127.53 0.2818 2.6855 0.5420 0.8300 3.2029 1.2216 31.3150

% 0.32% -0.34% -0.35% -0.28% -0.33% 0.15% 0.00% 0.13% -0.04% -0.37% -0.33% 0.35% -0.47% -0.08% -0.23%

EURSEK & OMXS 8.9 575 8.7 500 8.5 425 8.3 8.1 350 27-Sep 17-Oct 6-Nov
OMXS ra. EURSEK

1m 3m 6m 12m 3y 5y 7y 10y

NIBOR Prior 1.77 1.86 2.06 2.18 2.28 2.59 2.89 3.23

SWAP AND MONEYMARKET RATES STIBOR EURIBOR Last Prior Last Prior 1.78 1.41 1.41 0.06 1.88 1.48 1.49 0.13 2.07 1.59 1.60 0.27 2.20 1.69 1.70 0.40 2.29 1.39 1.38 0.56 2.61 1.59 1.57 0.94 2.91 1.82 1.81 1.34 3.25 2.07 2.06 1.78

Last 0.06 0.13 0.27 0.40 0.56 0.93 1.32 1.76

USD LIBOR Prior Last 0.21 0.21 0.31 0.31 0.54 0.53 0.71 0.71 0.51 0.47 0.87 0.81 1.29 1.24 1.80 1.74

Gov. Bonds, 10y 1.70 1.60 1.50 1.40

NOK, ra.

2.40 2.20 2.00 1.80

SEK

27-Sep 17-Oc t 6-Nov

10y 10y yield vs bund

NORWAY Prior Last 99.86 99.68 2.01 2.03 0.58 0.60

GOVERNMENT BONDS SWEDEN GERMANY Prior Last Prior Last 118.19 118.06 100.584 100.57 1.45 1.46 1.43 1.44 0.01 0.02

US Prior 98.875 1.75 0.32

Last 99.30 1.71 0.27

JPY and DowJones 14.0 81 13.5 79 13.0 77 12.5 12.0 75 27-Sep 17-Oct 6-Nov
USDJPY ra. DowJones, 1000

In 3m 6m 12m

INTEREST RATE FORECASTS NORWAY SWEDEN GERMANY 3m nibor 10y swap 3m stibor 10y swap 3m euribor 10y swap 1.90 3.25 1.30 2.25 0.35 1.75 1.90 3.25 1.30 2.25 0.25 1.75 2.15 3.50 1.30 2.50 0.25 2.00

US 3m libor 10y 0.45 0.45 0.45

swap 1.75 1.75 2.25

USD and gold 1820 1720 1620 1520

EURUSD ra.

1.32 1.28 1.24 1.20

Gold

27-Sep 17-Oct 6-Nov

MISCELLANEOUS FRA NOK 3m Prior chg TWI Today % DEC 1.88 1.87 0.01 NOK 91.64 0.02 MAR 1.87 1.86 0.01 SEK 114.17 0.06 JUN 1.89 1.88 0.00 EUR 101.10 0.22 SEP 1.92 1.91 0.01 USD 80.40 - 0.28 FRA SEK 3m Prior chg GBP 83.80 - 0.1 DEC 1.44 1.44 0.00 Comm. Today Last MAR 1.28 1.29 0.00 Brent spot 110.1 110.1 JUN 1.23 1.23 0.00 Brent 1m 110.9 111.1 SEP 1.22 1.23 -0.01 Spot gold 0.0 1691.0 Sources to all tables and graphics: Reuters and DNB Markets

Stock ex. Today Dow Jones 13,245.7 Nasdaq 3,011.9 FTSE100 5,884.9 Eurostoxx50 2,535.9 Dax 7,377.8 Nikkei225 8,972.9 Oslo 443.34 Stockholm 508.90 Copenhagen 621.16

% 1.0% 0.4% 0.8% 0.7% 0.7% 0.0% 0.5% 0.8% -2.8%

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