Investment Research — General Market Conditions

22 July 2010

Danske Daily
Markets overnight
Fed Chairman Ben Bernanke signalled no policy shift in connection with his Market movers today:
testimony yesterday before the Senate Banking Committee. The impression from
Bernanke’s prepared statement is that we are still far from a situation in which the Fed Flash Manufacturing and Service
will consider further monetary easing, see prepared statement. Bernanke stressed that PMIs in Germany (9:30 CET),
board members’ recent downgrade of their view on the US economy should mainly be France (9:50 CET) and the euro
seen as a minor adjustment. In addition, the statement focused on how to unwind area (10:00 CET)
monetary stimulus while how to ease monetary policy further if needed was not
US Existing home sales (16:00
mentioned at all. That said, Bernanke acknowledged that the “economic outlook
CET)
remains unusually uncertain” and kept all policy options open.
Fed Chairman Bernanke gives
The US stock market sold off in late trade on disappointment that Fed Chairman
semi-annual report to the House
Bernanke’s statement did not show any movement towards an easing bias. Q2
(15:30 CET)
earnings reports on balance were better than expected, with Fiat, Morgan
Stanley Wells Fargo and EBay all beating expectations, but this was shrugged by Q2 earnings (incl. Microsoft,
the market. S&P 500 yesterday closed down 1.3%. The negative sentiment on the Caterpillar, Amazon, Nokia and
stock market has continued in Asian trade with Nikkei and Hang Seng this morning Volvo )
down 0.6% and 0.2%.
US bond yields lunged and the yield curve flattened yesterday, taking its lead
mainly from the stock market. US 2-year bond yield dropped 2bp to a new record Market overview
low of 0.55% and 10-year US bond yields have declined 6bp to 2.87% since market 07:30 1 day +/-,%
close in Europe yesterday.
S&P500 (clo se) 1069,6  -1,28
S&P500 fut (chng fro m clo se) 1062,3  -0,15
In the FX market USD and JPY have strengthened on the back of the Nikkei 9200,7  -0,84
deterioration in the risk sentiment in the market. In addition, increasing scepticism Hang Seng 20449,9  -0,18

about the outcome of the EU stress tests to be released tomorrow is weighing a bit on 17:00 07:30 +/-, bp
EUR. The Scandinavian currencies SEK and NOK are this morning trading largely
US 2y gov 0,58 0,55  -2,4
unchanged against EUR. US 10y gov 2,93 2,87  -6,3

iTraxx Europe (IG) 113 116  2,3

Global Daily iTraxx Xover (Non IG) 425 524  98,7

+/-, %
The biggest event today will be the release of flash manufacturing and service EUR/USD 1,281 1,278  -0,30
PMIs in the euro area. We expect manufacturing PMIs to decline a bit more than USD/JPY 87,170 86,460  -0,81
EUR/CHF 1,35 1,34  -0,44
consensus underlining that the recovery in manufacturing activity is currently losing EUR/GBP 0,843 0,841  -0,22
some momentum. EUR/SEK 9,451 9,454  0,02
EUR/NOK 8,01 8,02  0,16
Fed Chairman Ben Bernanke will today repeat his testimony before the House
USD
Banking Committee but barring surprises in the Q&A session there should be little Oil Brent, USD 75,5 75,2  -0,44
Gold, USD 1192,7 1185,2  -0,63
new information from Bernanke today.
In the US we expect home sales to have taken another big hit in June mostly Note:
* The iTraxx Europe Index show the spread development for
reflecting the impact from the expiry of the first-time-homebuyer tax credit in April. the most liquid investment grade CDS contracts in the euro
However, this is “old” news and will probably not have a big impact on markets. credit market.

**The iTraxx Europe Crossover show the spread

Scandi Daily development of the most liquid non-investment grade CDS
contracts in the euro credit market.
With no major economic releases today, focus in Scandinavia will mainly be on Source: Bloomberg
earnings reports, from among others Nokia, Volvo, ABB and Swedbank. From 12-30 July Danske Daily will be
published in a reduced summer edition

Senior Analyst
Flemming J. Nielsen
+45 45 12 85 35
flemm@danskebank.com

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Danske Daily

Key figures and events

Thursday, July 22, 2010 Period Danske Bank Consensus Previous

- OTH Earnings - ABB, Volvo, Nokia, Caterpillar, Microsoft, American Express, Amazon.com
- CAD Bank of Canada publish Monetary Policy Report
6:30 JPY All Industry Index m/m May -0.4% 1.8%
8:45 FRF Business confidence indicator Index Jul 95 95
8:45 FRF Consumer confidence indicator Net bal. Jul -40 -39
9:30 DEM PMI Manufacturing, Preliminary Index Jul 57.6 58.0 58.4
9:30 DEM PMI Services, Preliminary Index Jul 54.5 54.6 54.8
9:30 DKK Consumer confidence Index Jul 0.5 -1.5
9:50 FRF PMI Services, Preliminary Index Jul 59.8 60.0 60.8
9:50 FRF PMI Manufacturing, preliminary Index Jul 54.5 54.1 54.8
10:00 EUR PMI Manufacturing, Preliminary Index Jul 55.0 55.2 55.6
10:00 EUR PMI Composite, Preliminary Index Jul 55.1 55.2 56.0
10:00 EUR PMI Services, preliminary Jul 55.2 55.0 55.5
10:30 GBP Retail Sales ex auto fuel m/m|y/y Jun 0.6%|2.4% 0.5%|3.4%
10:30 GBP Retail Sales inc. auto fuel m/m|y/y Jun 0.5%|1.0% 0.6%|2.2%
11:00 EUR Industrial new orders m/m|y/y May -0.3%|.. -0.2%|19.5% 0.6%|21.8%
14:30 CAD Retail sales m/m May 0.5% -2.0%
14:30 USD Initial jobless claims 1000 450 429
15:30 USD Fed's Bernanke (voter, neutral) Gives semiannual report to the House Panel
16:00 USD Leading indicator Index Jun -0.3% 0.4%
16:00 USD Existing home sales m (m/m) Jun 4.90 (-13.5%) 5.20 (-8.1%) 5.66 (-2.2%)
16:00 EUR Consumer confidence Net balanc Jul -16 -17 -17

2| 22 July 2010
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