Investment Research — General Market Conditions

13 July 2010

Danske Daily
Markets overnight
The earnings season was off to a good start yesterday as Alcoa reported above-
Market movers today:
expectations earnings after the closing bell. US equities edged slightly higher in
Monday’s trading session, as investors awaited the second-quarter results from the SEK: Unemployment (10:00 CET)
aluminium producer. Hence, the S&P500 index ended the day 0.1% up.
GBP: CPI (10:30 CET)
The speeches from Fed’s Lacker, Bernanke and Duke indicated that there are no
DEM: ZEW (11:00 CET)
plans to deploy additional measures of monetary stimulus and that the recovery
remains intact. The comments echoed remarks made last week by other Fed officials EUR: ECB allotment (11:15 CET)
and follow a period of somewhat disappointing US economic data, which have fuelled USD: Trade balance (14:30 CET)
market speculation that further monetary stimulus might be in the pipeline.
Q2 earnings (Intel)
US treasuries ended the day largely unchanged, the curve showing bear flattening as
the 2-year yield was up 2bp while the 10-year yield rose 1bp.
The ratings agency Fitch warned Japan that it may be facing a downgrade, after Market overview
the defeat of the DPJ-led coalition has made fiscal consolidation harder to achieve. 07:30 1 day +/-,%

See more details on the election here. S&P500 (clo se) 1078.8  0.07
S&P500 fut (chng fro m clo se) 1074.8  -0.17
Asian equities are lower this morning, following remarks by the Chinese Nikkei 9524.3  -0.25
government that it will enforce policies preventing speculative real estate investments. Hang Seng 20454.8  -0.06

The S&P500 future is also trading in red. 17:00 07:30 +/-, bp

US 2y gov 0.62 0.63  1.6

US 10y gov 3.01 3.04  3.1
Global Daily iTraxx Europe (IG) 112 117  5.0
Focus today will be on the continued stream of Q2 earnings reports, as well as key iTraxx Xover (Non IG) 451 536  84.7

European data releases. US trade balance data will also draw some attention. +/-, %
EUR/USD 1.258 1.259  0.15
The German ZEW expectations index will receive some attention today, as it has USD/JPY 88.400 88.570  0.19
EUR/CHF 1.34 1.34 -0.03
been a good early indicator of turns in Ifo and PMI during this crisis. Our model EUR/GBP 0.836 0.838

 0.29
indicates a modest increase. EUR/SEK 9.459 9.415  -0.46
EUR/NOK 8.00 7.99  -0.07
In the UK, inflation numbers are released, expected to show that the 3.0% target
USD
has been exceeded for the fourth month in a row. Also, MPC member Sentance’s Oil Brent, USD 74.0 74.1  0.18
speech at 14:30 could attract some attention, following his surprise vote for a hike at Gold, USD 1198.5 1199.5  0.08

the most recent MPC meeting. Note:

* The iTraxx Europe Index show the spread development
On the FX market, UK inflation numbers, which are expected to be upbeat, as well for the most liquid investment grade CDS contracts in
the euro credit market.
as possibly hawkish comments from MPC member Sentance may tempt GBP bulls.
The results from the ECB liquidity allotment will give an indication of the liquidity **The iTraxx Europe Crossover show the spread
needs of the European banking sector, with a small number likely to be EUR-positive. development of the most liquid non-investment grade
CDS contracts in the euro credit market.
Source: Bloomberg

Scandi Daily
The Swedish krona continues to perform in summer-thin markets and EUR/SEK
From 12-30 July Danske Daily will be
is now approaching the strong resistance levels around 9.41 (19/20 August highs)
published in a reduced summer edition
from above. Further SEK strength cannot be ruled out if the positive start to the
earnings season continues, and the pair could slip below our 3 Month forecast of 9.40.
Data on Swedish unemployment are expected to show a rise to 4.8% in June, from Senior Analyst
4.5% previously. There are no other scheduled data releases in Scandinavia today. Sverre Holbek
+45 45 14 88 82
holb@danskebank.dk

www.danskeresearch.com
Danske Daily

Key figures and events

Tuesday, July 13, 2010 Period Danske Bank Consensus Previous
- OTH Earnings: Intel
- EUR Greek auction of 26 week T-bills (EUR1.25bn)
1:01 GBP RICS House Price Balance Index Jun 20% 22%
3:30 AUD Business confidence Index Jun 5
6:30 JPY Industrial production, final m/m|y/y May -0.1%|20.2%
7:00 JPY Consumer sentiment survey Index Jun 42.5 42.7
8:45 FRF Inflation (HICP) m/m|y/y Jun 0.0%|1.8% 0.1%|1.9%
9:00 ESP Inflation (HICP) m/m|y/y Jun 0.2%|1.5%
9:15 CHF Producer & Import prices m/m|y/y Jun 0.3%|1.4%
10:00 SEK Unemployment % Jun 4.5
10:30 GBP CPI m/m|y/y Jun 0.0%|3.2% 0.2%|3.4%
11:00 DEM ZEW economic sentiment Index Jul 29.8 25.0 28.7
11:00 DEM ZEW current situation Index Jul 0.0 -3.0 -7.9
11:15 EUR ECB allots funds in 3 month and 6 day refinancing operations
14:30 USD Trade balance USD bn May -39.0 -40.3
20:00 USD Budget statement USD bn Jun -73.8 -135.9

2| 13 July 2010
www.danskeresearch.com
Danske Daily

Disclosure
This research report has been prepared by Danske Research, which is part of Danske Markets, a division of
Danske Bank. Danske Bank is under supervision by the Danish Financial Supervisory Authority

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 the Danske
Bank Research Policy. Employees within the Danske Bank Research Departments have been instructed that any
request that might impair the objectivity and independence of research shall be referred to Research Management
and to the Compliance Officer. Danske Bank Research departments are organised independently from and do not
report to other Danske Bank business areas. Research analysts are remunerated in part based on the over-all
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.

Danske Bank research reports are prepared in accordance with the Danish Society of Investment Professionals’
Ethical rules and the Recommendations of the Danish Securities Dealers Association.

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 upon 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.

Expected updates
This publication is updated on a daily basis.

First date of publication

Please see the front page of this research report for the first date of publication.

Disclaimer
This publication has been prepared by Danske Markets for information purposes only. It has been prepared
independently, solely from publicly available information and does not take into account the views of Danske
Bank’s internal credit department. It is not an offer or solicitation of any offer to purchase or sell any financial
instrument. Whilst 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 no liability is accepted for any loss arising from
reliance on it. Danske Bank, its affiliates or staff may perform services for, solicit business from, hold long or
short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned
herein. The Equity and Corporate Bonds analysts are not permitted to invest in securities under coverage in their
research sector. This publication is not intended for retail customers in the UK or any person in the US. Danske
Markets is a division of Danske Bank A/S. Danske Bank A/S is authorized by the Danish Financial Supervisory
Authority and is subject to provisions of relevant regulators in all other jurisdictions where Danske Bank A/S
conducts operations. Moreover Danske Bank A/S is subject to limited regulation by the Financial Services
Authority (UK). Details on the extent of our regulation by the Financial Services Authority are available from us
on request. Copyright (C) Danske Bank A/S. All rights reserved. This publication is protected by copyright and
may not be reproduced in whole or in part without permission.

This publication has been prepared by the correspondent of Auerbach Grayson & Company Incorporated
(“AGC”) named above on the date listed above.

We are distributing this publication in the U.S. and any U.S. person receiving this report and wishing to effect
transactions in any security discussed herein, should do so only with a representative of Auerbach Grayson &
Company Incorporated. Additional information on recommended securities is available on request.

3| 13 July 2010
www.danskeresearch.com