11 October 2013 Economics Research

http://www.credit-suisse.com/researchandanalytics

US Economics Digest
Research Analysts Neal Soss 212 325 3335 neal.soss@credit-suisse.com Dana Saporta 212 538 3163 dana.saporta@credit-suisse.com Jill Brown 212 325 1578 jill.brown@credit-suisse.com

The 2014 FOMC: A New Cast of Characters

President Obama met market expectations this week by nominating Fed Vice Chair Janet Yellen to succeed Chairman Ben Bernanke. Assuming Yellen is confirmed by the Senate, she will begin a four-year term as Chair of the Federal Reserve on February 1, 2014.
This transition in leadership is but one of several changes to the Federal Reserve that we will see in 2014. Within the next few months, the composition of the Federal Open Market Committee is likely to look very different than it does today. We already know of three imminent vacancies on the seven-member Fed Board of Governors and the pending retirement of one Fed district bank president. More vacancies are possible as 2014 progresses. These changes all come against the backdrop of the annual rotation of district bank presidents into voting seats on the FOMC. The 2014 bank president voting contingent is likely to be more hawkish than it has been this year. In another change, the Dodd-Frank financial reform legislation requires that a second Fed Vice Chair be named, in addition to the individual who eventually assumes Yellens current role. The responsibility of the second Vice Chair will be to focus on issues of bank supervision. In this research note, we discuss the above changes in turn. We also provide our hawk/dove scale from September 24, presenting our views on the policy predispositions of officials on the Federal Open Market Committee.

Exhibit 1: The Federal Open Market Committee in 2014

Credit Suisse forecasts

Board of Governors*
Janet Yellen, Fed Chairman Vacant, Fed Vice Chairman Daniel Tarullo, Fed Vice Chairman for Supervision Jerome Powell (term expires 1/31/14) Jeremy Stein (may return to Harvard) Vacant Vacant

District Bank Presidents

Boston (Eric Rosengren) New York (William Dudley), FOMC Vice Chair* Philadelphia (Charles Plosser)* Cleveland (Sandra Pianalto's successor)* Richmond (Jeffrey Lacker) Atlanta (Dennis Lockhart) Chicago (Charles Evans) St. Louis (James Bullard) Minneapolis (Narayana Kocherlakota)* Kansas City (Esther George) Dallas (Richard Fisher)* San Francisco (John Williams)

Source: Federal Reserve, Credit Suisse

* = Voting member ini 2014

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The 2014 FOMC: A New Cast of Characters

President Obama met market expectations this week by nominating Fed Vice Chair Janet Yellen to succeed Chairman Ben Bernanke. Assuming Yellen is confirmed by the Senate, she will begin a four-year term as Chair of the Federal Reserve on February 1, 2014. This transition in leadership is but one of several changes to the Federal Reserve that we will see in 2014. Within the next few months, the composition of the Federal Open Market Committee is likely to look very different than it does today. We already know of three imminent vacancies on the seven-member Fed Board of Governors and the pending retirement of one Fed district bank president. More vacancies are possible as 2014 progresses. These changes all come against the backdrop of the annual rotation of district bank presidents into voting seats on the FOMC. In another change, the Dodd-Frank financial reform legislation requires that a second Fed Vice Chair be named, in addition to the individual who eventually assumes Yellens current role. The responsibility of the second Vice Chair will be to focus on issues of financial supervision. Below we consider each of these changes in turn.

An Historic Appointment at a Critical Time

Its official, if not surprising. The nomination of Janet Yellen as Fed Chair came as a relief to markets that have been digesting a stream of bad news otherwise, mainly concerning fiscal gridlock in DC. If confirmed, Dr. Yellen will be the first woman to serve as Chairman in the 100-year history of the Federal Reserve System. And she will be the first Vice Chair of the Fed Board to be promoted to the Chairmans seat. Also, she would be the first Democrat to head the Fed since Paul Volckers chairmanship (1979-87).

Exhibit 2: A Fed Chairman Chronology, 1914-Present

Term as Chairman of the Federal Reserve

Chair Name Charles S. Hamlin William P. G. Harding Daniel R. Crissinger Roy A. Young Eugene Meyer Eugene R. Black Marriner S. Eccles Thomas B. McCabe William McChesney Martin, Jr. Arthur F. Burns G. William Miller Paul A. Volcker Alan Greenspan Ben Bernanke Janet Yellen (nominated)
Source: Federal Reserve, Credit Suisse

From August 10, 1914 August 10, 1916 May 1, 1923 October 4, 1927 September 16, 1930 May 19, 1933 November 15, 1934 April 15, 1948 April 2, 1951 February 1, 1970 March 8, 1978 August 6, 1979 August 11, 1987 February 1, 2006 February 1, 2014

Until August 19, 1916 August 9, 1922 September 15, 1927 August 31, 1930 May 10, 1933 August 15, 1934 January 31, 1948 March 31, 1951 January 31, 1970 January 31, 1978 August 6, 1979 August 11, 1987 January 31, 2006 January 31, 2014 NA

The next step is for Yellen to testify at a confirmation hearing before the Senate Banking Committee. (Currently, the Committee is comprised of 12 Democrats and 10 Republicans.) The Committee will then take one of four steps: report the nomination to the Senate favorably, unfavorably, without recommendation, or it may choose to take no action. Assuming the Banking Committee approves Yellen, then the vote goes to the full Senate.

The Senate is composed of 52 Democrats, 2 Independents (who caucus with the Democrats) and 46 Republicans. A simple majority is needed to confirm a presidential nominee, but 60 votes are needed to close the debate on the nomination. Our expectation is that Yellen will be confirmed, but not without dissension from those Republicans who are concerned that she is too dovish. The transition from the Bernanke Fed to the Yellen Fed likely will be a smooth one. An FOMC veteran, Yellen served as a governor from 1994 to 1997, as president of the San Francisco Fed from 2004 to 2010, and as Fed Vice Chair since October 2010. Yellen, also an academic, could be expected to largely continue Bernankes efforts to boost growth and employment by utilizing the Feds balance sheet and communications. She is widely respected within the Federal Reserve System. 1 Her rhetoric occasionally comes across as more dovish than Bernankes, and it is reasonable to wonder whether, as Chair, she would tolerate a slightly higher rate of inflation in pursuit of job growth. That said, Yellen has not wavered in her public support for the Feds 2% inflation target. We think Yellen was among those arguing against tapering at the September 17-18 FOMC meeting, and she is probably nowhere close to contemplating actually tightening policy via rate hikes. However, there is precedent (albeit in the mid 1990s) for her sounding hawkish warnings when she is uncomfortable with the inflation outlook. We believe Yellen will be careful not to remove accommodation prematurely, but it would be a mistake to think of her views as being static. Some have asked whether Yellen or Bernanke will take the lead role at the next three FOMC meetings. In practice, we dont think it would matter, as the resultant policy would probably be the same either way. That said, Yellen certainly should not be seen as assuming a chairman-type role before her Senate confirmation, which may not come until after the October 29-30 meeting and possibly after the December 17-18 meeting. At its first policy meeting each year, the FOMC names an FOMC Chairman (almost always the Fed Chairman) and an FOMC Vice Chairman (almost always the NY Fed President). It is possible that Bernanke will be named FOMC Chairman through January 31, and then Yellen will be named FOMC Chairman for the balance of the year. Alternatively, even if she is not yet sworn in, the FOMC in January may name Yellen the FOMC Chairman for the full year. In that case, she would call the shots at the Committee meeting on January 28-29. A Yellen chairmanship would leave open her Vice Chair seat on the Board of Governors. Another seat was vacated when Governor Duke left the Fed at the end of August. And Governor Raskin, who abstained from the September 18 FOMC vote, is about to leave the Fed to join the Treasury. So, that makes three of seven slots to be filled (Exhibit 3). Whats more, Fed Governor Powells term expires on January 31, 2014. He probably will be encouraged to stay on indefinitely, until a replacement is found. (That is what Governor Duke did, as her term expired back in 2012.) And our understanding is that Fed Governor Stein risks losing his tenure at Harvard if he does not return by May. Suffice it to say, the Fed Board of Governors may look very different by next spring.

In his book, "A Term at the Fed: An Insider's View," former Fed Governor Laurence Meyer singles out Janet Yellen as one of the few FOMC participants who had the power to persuade then-Chairman Alan Greenspan.

Exhibit 3: The Federal Open Market Committee in 2014

Credit Suisse forecasts

Board of Governors*
Janet Yellen, Fed Chairman Vacant, Fed Vice Chairman Daniel Tarullo, Fed Vice Chairman for Supervision Jerome Powell (term expires 1/31/14) Jeremy Stein (may return to Harvard) Vacant Vacant

District Bank Presidents

Boston (Eric Rosengren) New York (William Dudley), FOMC Vice Chair* Philadelphia (Charles Plosser)* Cleveland (Sandra Pianalto's successor)* Richmond (Jeffrey Lacker) Atlanta (Dennis Lockhart) Chicago (Charles Evans) St. Louis (James Bullard) Minneapolis (Narayana Kocherlakota)* Kansas City (Esther George) Dallas (Richard Fisher)* San Francisco (John Williams)

Source: Credit Suisse, Federal Reserve

* = Voting member in 2014

These current and prospective Board vacancies arent mere curiosities. By law, it takes five members of the Board of Governors to constitute a quorum. So, we should be hearing news from the White House within weeks regarding at least one more Fed Board appointment. Finally, Cleveland Fed President Pianalto, a voting member on the FOMC in 2014, has announced her intention to retire early next year. We're told that Pianalto intends to stay at the Cleveland Fed until her successor is in place. If she were to leave before then, the Cleveland Fed's First Vice President would serve in her place (and vote at FOMC meetings) in the interim. (In contrast to Fed governors, who are appointed by the President and subject to Senate confirmation, district bank Fed presidents are chosen by their individual banks Boards of Directors with a degree of oversight from the Federal Reserve Board.)

The Annual District Bank Shuffle

The first FOMC meeting of each calendar year (e.g., January 28-29, 2014) features the annual rotation of district bank presidents into voting seats on the committee. On balance, we expect the bank president voting contingent on the 2014 FOMC to be its most hawkish since 2011. This would be due primarily to the rotation of two vocal hawks into voting seats. At least one formal dissent per meeting is likely in 2014. The Procedure All seven Federal Reserve Board governors and the 12 district bank presidents are members of the FOMC and participate in the committee's eight annual meetings. Although the opinion of every member is solicited at every meeting, only a total of 12 FOMC officials have a vote on monetary policy in any given year. The seven Fed governors always have a vote, and the president of the New York Fed is ex officio vice chairman of the FOMC and a permanent voter (Exhibit 4). The remaining four votes are distributed among the other 11 district bank presidents on a rotating basis. The voting rotation of the bank presidents outside the New York district is broken down into four groupings. The Chicago Fed and Cleveland Fed presidents vote every other year. Presidents in the remaining nine regions vote every third year. The table below shows the rotation of voting presidents for 2012 through 2015:

Exhibit 4: The Annual FOMC Voting Seat Shuffle

Federal Open Market Committee District Bank rotation

Rotation New York Boston Philadelphia Richmond Chicago Cleveland Kansas City Minneapolis San Francisco St. Louis Dallas Atlanta
Source: Federal Reserve, Credit Suisse

2012 Dudley (NY) Lacker (Richmond) Pianalto (Cleveland) Williams (San Francisco) Lockhart (Atlanta)

2013 Dudley (NY) Rosengren (Boston) Evans (Chicago) George (Kansas City) Bullard (St. Louis)

2014 Dudley (NY) Plosser (Philly) Pianalto (Cleveland) Kocherlakota (Minneapolis) Fisher (Dallas)

2015 Dudley (NY) Lacker (Richmond) Evans (Chicago) Williams (San Francisco) Lockhart (Atlanta)

The Personalities In general, the rotation of voting members has an impact on the implementation of monetary policy only if the incoming presidents carry decidedly different views toward policy from the outgoing presidents. After all, even though he (or she) has only one vote, the chairmans influence often guides the collective thinking of the rest of the committee. Most FOMC members particularly the other six governors and NY Fed president tend to side with the chairman. (At the moment, this probably reflects their assessment of the economy and the appropriate stance of monetary policy. But even more generally, the Feds organization chart encourages considerable deference to the chairmans views.) Two frequent dissenters with stringent anti-inflation views will have votes in 2014 Charles Plosser (Philadelphia) and Richard Fisher (Dallas). Their positions as voters will more than offset Esther Georges (Kansas City Fed) loss of a vote next year. This year was Georges first term as an FOMC voter, and she has dissented in favor of tighter policy in every policy meeting to date six so far. Also moving into voting positions next year will be Narayana Kocherlakota (Minneapolis) and Sandra Pianalto (Cleveland). Once counted among the hawks, Kocherlakota is now one of the most dovish of the district bank presidents. Pianalto, more neutral in her policy leanings, never dissented in her five previous voting terms. When monetary policy in the US is steady and routine for an extended period of time, the individual personalities on the FOMC fade in importance. Dissents are rare, and policymakers rhetoric in public speeches and congressional testimonies take on fairly uniform characteristics. Fed-speak fades as a motivator of market moves. But in times like the past few years, when policy has been in flux and anything but conventional, having insight into the thinking of each policymaker can be beneficial. Generally, we are uncomfortable applying blanket labels to policymakers. To call someone a hawk (focused more on the Feds price stability mandate) or a dove (more concerned with maximum, sustainable employment) is to suggest his or her views are inflexible in the face of evolving economic and financial market conditions. For the most part, this is clearly not the case. But, as former Kansas City Fed President Hoenig himself once observed, these labels are often used as a quick way to characterize Reserve Bank presidents' opinions about future monetary policy. With the above caveat in mind, we briefly characterize the backgrounds and views of incoming 2014 voters below, fully recognizing that we cannot do them justice in a few sentences: Sandra Pianalto (Cleveland) has been president of the Cleveland Fed for over a decade, making her the longest serving member of the FOMC. She joined the bank as an economist back in 1983. As previously noted, Pianalto has indicated her intention to retire in early 2014; so, her successor will inherit her voting seat on the FOMC.

Pianalto has been decidedly moderate in her views, having always voted with the majority. However, in an October 8 speech, she stressed her desire to scale back QE, going so far as to say she believed the FOMC should have tapered at September 17-18 meeting: While to date the risks have mostly remained theoretical, I remain convinced that we need to be cautious in our expansion of asset purchases , For me the improvement in labor markets seemed substantial enough to support a scaling back of the asset-purchase program at last months policy meeting. Narayana Kocherlakota (Minneapolis) has served as his banks president since October 8, 2009. Before his appointment as president, Kocherlakota was a member of the Minneapolis Feds Research staff, as well as a Research consultant for the Bank. Kocherlakota has switched his vantage considerably since he was a voting member of the FOMC in 2011. Three years ago, Kocherlakota was seen as one of the more hawkish members of the FOMC, dissenting two times in favor of tighter policy. However, by September 2012, his views had changed considerably:

As long as the FOMC is continuing to satisfy its price stability mandate, it should keep the fed funds rate extraordinarily low until the unemployment rate has fallen below 5.5 percent. Today, one could even argue that Kocherlakota defines the dovish end of the FOMC policy bias spectrum. In an October 4 speech, he took a page from ECB Governor Draghis book, telling his audience the FOMC needs to do whatever it takes.
Over six years after the national unemployment rate first began its ascent, the labor market remains disturbingly weak. The good news is that, with low inflation, the FOMC has considerable monetary policy capacity at its disposal with which to address this problem. The FOMCs test today is to figure out how best to deploy this capacity. The answer lies in taking two steps. The first step is to communicate that our goal is to accomplish a fast return to maximal employment while keeping inflation close to, although possibly temporarily above, the target of 2 percent. The second step is to do whatever it takes, on an ongoing basis, to achieve that goal. Charles Plosser (Philadelphia) joined the federal reserve bank in 2006 and is in the midst of serving his second term as president and CEO of the bank. Plosser was instrumental in crafting the Feds current communication strategy of transparency. Plosser is known to be a more hawkish member of the FOMC. He has been very vocal against expanding the central banks balance sheet. The last time he was a voting member of the FOMC was in 2011, when he dissented twice in favor of tighter monetary policy (along with Kocherlakota and Fisher). Recently he has spoken out about putting an end to QE, criticizing the Committee for not taking action in September. On October 8, Plosser said the following: To delay tapering of our current asset purchase scheme without clear and significant departures from prior guidelines suggested the FOMC was changing the goalposts and deviating from Junes forward guidance. This undermines the credibility of the committee and reduces the effectiveness of forward guidance as a policy tool. Based on this outlook and the improvement in labor market conditions, I believe it would be appropriate for the Fed to begin to reduce the pace at which we are expanding our balance sheet and to bring the purchase program to a close. We missed an excellent opportunity to begin this tapering process in September.

Richard Fisher (Dallas) has served as bank president since April 4, 2005. Before his appointment as president, Fisher served various roles in government, business and academia. Fisher was a voting member on the FOMC in both 2008 and 2011. Fisher is considered one of the more hawkish members of the FOMC; he has long been opposed to recent easy money policies. In voting on the FOMC in 2011 Fisher, along with Kocherlakota and Plosser, dissented at two meetings, including the one that implemented operation twist. In recent speeches, Fisher has been criticizing the Fed for not taking action in September, especially due to the uncertainty it has created around future policy. In an October 3 speech he said: the recent decision of the Federal Open Market Committee (FOMC) to maintain the pace of its large-scale asset purchases in the face of a generally improving labor market outlook and a widespread perception within financial markets, right or wrong, that the Fed had telegraphed a dialing back of the rate of purchases may have increased uncertainty about the future path of monetary policy. That was one argument raised against the decision not to taper. I know, because I made the argument, and I was not alone.

When One Vice Chair is Not Enough

A little-known provision of the enormous Dodd-Frank financial reform law concerns changes to governance and positions at the Federal Reserve. Buried in Title XI of DoddFrank is language creating a new position at the Fed, the Vice Chairman for Supervision. Like the Vice Chairman of the Board, the Vice Chairman for Supervision will have a term of four years. While the Vice Chairman of the Board is charged with serving in the absence of the Chairman, the law states that the Vice Chairman for Supervision shall develop policy recommendations for the Board regarding supervision and regulation of depository institution holding companies and other financial firms supervised by the Board, and shall oversee the supervision and regulation of such firms. One natural candidate for the new vice chairmanship position is Fed Governor Tarullo, who has carved out bank supervision as his specialty on the Fed Board. We expect the new vice chairman to be named sometime in 2014. *** When Bernanke steps down early next year, his successor presumably Yellen -- will inherit responsibility for a Board of Governors and an FOMC that are significantly more transparent and innovative than the institution Bernanke first joined as a governor in 2002. Under Bernankes leadership, the FOMC also became much more democratic and permissive in the sense that individual participants were not discouraged from airing their views publicly, even if those views were in direct contrast to the Feds stated policies. The resulting cacaphony of opinions has at times distracted the publics attention from the Feds institutional message. The new Chair will need to guide this group of vocal and disparate policymakers through a series of critical decisions regarding both the future pace and duration of QE3 and the eventual commencement of policy normalization (i.e., the exit strategy). We wonder whether Janet Yellen anticipated this challenge when she included the following in her statement at the White House on Wednesday: The Fed has powerful tools to influence the economy and the financial system, but I believe its greatest strength rests in its capacity to approach important decisions with expertise and objectivity, to vigorously debate diverse views, and then to unite behind its response.

Below, we provide our hawk/dove scale from September 24 with the caveat that one should be cautious in the use of blanket labels to characterize the predilections of Fed officials. Exhibit 5 lists the current FOMC participants, along with our informal determination of their policy leanings based on each officials voting history and public comments.

Exhibit 5: Monetary Policymaker Bias Scale

Hawkish Charles I. Plosser (Philadelphia Fed President) Esther George (Kansas City Fed President) Richard W. Fisher (Dallas Fed President) Jeffery M. Lacker (Richmond Fed President) Sandra Pianalto* (Cleveland Fed President) Dennis P. Lockhart (Atlanta Fed President) Jerome H. Powell** (Governor) Jeremy Stein (Governor) Daniel K. Tarullo (Governor) James Bullard (St. Louis Fed President) Ben S. Bernanke* (Chairman) William Dudley (New York Fed President) John Williams (San Francisco Fed President) Janet L. Yellen (Vice Chair, FRB) Narayana Kocherlakota (Minneapolis Fed President) Eric S. Rosengren (Boston Fed President) Charles L. Evans (Chicago Fed President) Sarah Bloom Raskin* (Governor) Vacant* (Governor)
** Powells term as Governor expires at the end of January, but he may continue serving until a new appointment is made. Source: Credit Suisse, Federal Reserve

Neutral

Dovish

2013 Voter

2014 Voter

End of term Feb 29, 2016 Feb 29, 2016

Feb 29, 2016 Feb 29, 2016

Feb 29, 2016 Feb 29, 2016

Jan 31, 2014 Jan 31, 2018 Jan 31, 2022 Feb 29, 2016 Jan 31, 2020 (Governor) Jan 31, 2014 (Chairman) Feb 29, 2016 Feb 29, 2016 Jan 31, 2024 (Governor) Oct 4, 2014 (Vice Chair) Feb 29, 2016 Feb 29, 2016 Feb 29, 2016 Jan 31, 2016

Jan 31, 2026

* Duke left the Fed on August 31, 2013; Ber nankes term as Chairman expires on January 31, 2014; Raskin is leaving the Fed to join the US Treasury; Pianalto is retiring in early 2014.

GLOBAL FIXED INCOME AND ECONOMIC RESEARCH

Dr. Neal Soss, Managing Director Chief Economist and Global Head of Economic Research +1 212 325 3335 neal.soss@credit-suisse.com Eric Miller, Managing Director Global Head of Fixed Income and Economic Research +1 212 538 6480 eric.miller.3@credit-suisse.com

US AND CANADA ECONOMICS

Dr. Neal Soss, Managing Director Head of US Economics +1 212 325 3335 neal.soss@credit-suisse.com Dana Saporta, Director +1 212 538 3163 dana.saporta@credit-suisse.com Jonathan Basile, Director +1 212 538 1436 jonathan.basile@credit-suisse.com Jill Brown, Vice President +1 212 325 1578 jill.brown@credit-suisse.com Jay Feldman, Director +1 212 325 7634 jay.feldman@credit-suisse.com Isaac Lebwohl, Associate +1 212 538 1906 isaac.lebwohl@credit-suisse.com Henry Mo, Director +1 212 538 0327 henry.mo@credit-suisse.com Peggy Riordan, AVP +1 212 325 7525 peggy.riordan@credit-suisse.com

LATIN AMERICA ECONOMICS AND STRATEGY

Alonso Cervera, Managing Director Head of Non-Brazil Latam Economics +52 55 5283 3845 alonso.cervera@credit-suisse.com Mexico, Chile Nilson Teixeira, Managing Director Head of Brazil Economics +55 11 3701 6288 nilson.teixeira@credit-suisse.com Casey Reckman, Vice President +1 212 325 5570 casey.reckman@credit-suisse.com Argentina, Venezuela Daniel Lavarda, Vice President +55 11 3701 6352 daniel.lavarda@credit-suisse.com Brazil Daniel Chodos, Vice President +1 212 325 7708 daniel.chodos@credit-suisse.com Colombia, Latam Strategy Iana Ferrao, Associate +55 11 3701 6345 iana.ferrao@credit-suisse.com Brazil Juan Lorenzo Maldonado, Associate +1 212 325 4245 juanlorenzo.maldonado@credit-suisse.com Colombia, Peru Leonardo Fonseca, Associate +55 11 3701 6348 leonardo.fonseca@credit-suisse.com Brazil Di Fu, Analyst +1 212 538 4125 di.fu@credit-suisse.com

Paulo Coutinho, Associate +55 11 3701-6353 paulo.coutinho@credit-suisse.com Brazil

EURO AREA AND UK ECONOMICS

Neville Hill, Managing Director Head of European Economics +44 20 7888 1334 neville.hill@credit-suisse.com Axel Lang, Associate +44 20 7883 3738 axel.lang@credit-suisse.com Christel Aranda-Hassel, Director +44 20 7888 1383 christel.aranda-hassel@credit-suisse.com Steven Bryce, Analyst +44 20 7883 7360 steven.bryce@credit-suisse.com Giovanni Zanni, Director +44 20 7888 6827 giovanni.zanni@credit-suisse.com Mirco Bulega, Analyst +44 20 7883 9315 mirco.bulega@credit-suisse.com Violante di Canossa, Vice President +44 20 7883 4192 violante.dicanossa@credit-suisse.com

EASTERN EUROPE, MIDDLE EAST & AFRICA ECONOMICS AND STRATEGY

Berna Bayazitoglu, Managing Director Head of EEMEA Economics +44 20 7883 3431 berna.bayazitoglu@credit-suisse.com Turkey Alexey Pogorelov, Vice President +7 495 967 8772 alexey.pogorelov@credit-suisse.com Russia, Ukraine, Kazakhstan Sergei Voloboev, Director +44 20 7888 3694 sergei.voloboev@credit-suisse.com Russia, Ukraine, Kazakhstan Shahzad Hasan, Vice President +44 20 7883 1184 shahzad.hasan@credit-suisse.com EEMEA Strategy Carlos Teixeira, Director +27 11 012 8054 carlos.teixeira@credit-suisse.com South Africa Natig Mustafayev, Associate +44 20 7888 1065 natig.mustafayev@credit-suisse.com EM and EEMEA cross-country analysis Gergely Hudecz, Vice President +33 1 7039 0103 gergely.hudecz@credit-suisse.com Czech Republic, Hungary, Poland Nimrod Mevorach, Associate +44 20 7888 1257 nimrod.mevorach@credit-suisse.com EEMEA Strategy, Israel

JAPAN ECONOMICS AND STRATEGY

Hiromichi Shirakawa, Managing Director +81 3 4550 7117 hiromichi.shrirakawa@credit-suisse.com Takashi Shiono, Associate +81 3 4550 7189 takashi.shiono@credit-suisse.com Tomohiro Miyasaka, Director +81 3 4550 7171 tomohiro.miyasaka@credit-suisse.com

NON-JAPAN ASIA ECONOMICS

Dong Tao. Managing Director Head of NJA Economics +852 2101 7469 dong.tao@credit-suisse.com China Michael Wan, Analyst +65 6212 3418 michael.wan@credit-suisse.com Singapore, Philippines Robert Prior-Wandesforde, Director +65 6212 3707 robert.priorwandesforde@credit-suisse.com Regional, India, Indonesia, Australia Weishen Deng, Analyst +852 2101 7162 weishen.deng@credit-suisse.com China Christiaan Tuntono, Vice President +852 2101 7409 christiaan.tuntono@credit-suisse.com Hong Kong, Korea, Taiwan Santitarn Sathirathai, Vice President +65 6212 5675 santitarn.sathirathai@credit-suisse.com Regional, Malaysia, Thailand

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Investment principal on bonds can be eroded depending on sale price or market price. In addition, there are bonds on which investment principal can be eroded due to changes in redemption amounts. Care is required when investing in such instruments.

When you purchase non-listed Japanese fixed income securities (Japanese government bonds, Japanese municipal bonds, Japanese government guaranteed bonds, Japanese corporate bonds) from CS as a seller, you will be requested to pay the purchase price only.