Investment Research — General Market Conditions

28 July 2010

Danske Daily
Markets overnight
Both the S&P500 and Dow Jones index ended 0.1% lower yesterday while the
Market movers today:
Nasdaq index fell 0.4%. Wall Street struggled after data showed US consumer
confidence declined in July to its lowest since February (50.4 from 52.9 in June). ECB: Bank Lending Survey
Bank shares managed well however, following better-than-expected Q2 earnings from (10.00CET)
Deutsche Bank and UBS.
DEM: CPI(10.00-12.00CET)
Asian stocks have risen for the fourth straight day as Canon reported earnings that
USD: Mortgage applications
beat analysts’ estimates and JPMorgan upgraded the stock. The MSCI Asia Pacific
(13.00CET)
index climbed 0.7%, extending its gain in the past four days to 2.9%. Japan’s
Nikkei225 index is up an impressive 2.3% at the time of writing. USD: Durable goods orders
(14.30CET)
Australia’s consumer-price growth unexpectedly slowed in Q2, giving the central
bank scope to extend a pause in interest rate increases. The consumer price index rose NZD: RBNZ cash rate decision
0.6% from Q1, less than the consensus estimate of 1%, and less than 0.9% growth (23.00CET)
from Q4 to Q1. AUD slid the most in a week as traders reduced bets that the RBA Earnings: Boeing, Peugeot
will raise rates when meeting next week.
The US bond curve was lifted around 5bp yesterday due to supply pressures on
Treasuries. The S&P/Case-Shiller home price index posted a second straight Market overview
significant rise in May after some mild softness in Q1, bringing the cumulative 07:30 1 day +/-,%
recovery from the May 2009 low to almost 5%. S&P500 (clo se) 1113,8  -0,11
S&P500 fut (chng fro m clo se) 1111,0  0,01
In FX markets, EUR/USD clings to 1.30 and has traded in a narrow range overnight. Nikkei 9717,0  2,32
The yen declined yesterday and the positive stock markets in Asia have led to less Hang Seng 21082,1  0,52

demand for the safe-haven currency. 17:00 07:30 +/-, bp

Bloomberg runs a story that the threat of a European banking crisis is ending. The US 2y gov 0,63 0,65  1,6
US 10y gov 3,02 3,03  0,9
gap between European and US benchmark credit-default swap indices, used to hedge
against losses or speculate on creditworthiness, narrowed to 0.7bp yesterday, the iTraxx Europe (IG) 99 104  5,4
iTraxx Xover (Non IG) 389 480  90,5
lowest since early June. The premium soared to a record of 23bp on 7 May on
concern that the debt crisis in southern Europe would get out of control. +/-, %
EUR/USD 1,298 1,300  0,15
USD/JPY 87,860 87,740  -0,14
Global Daily EUR/CHF 1,38 1,38  -0,12
EUR/GBP 0,835 0,834  -0,12
Not that much on the data calendar today either; durable goods orders from the EUR/SEK 9,476 9,487  0,12
EUR/NOK 8,00 8,02  0,26
US is probably the largest potential market mover, likely to show an increase for the
sixth time in the past seven months. Orders dropped 0.6% in May, but are expected to USD
Oil Brent, USD 76,6 76,0  -0,69
have picked up 1% m/m in June. This can perhaps fuel sentiment in stock markets
Gold, USD 1163,2 1163,4  0,02
further. German CPI is not expected to be of great market impact, but a confirmation Note:
of the expected 0.3 percentage point rise in price growth can perhaps lead markets to * The iTraxx Europe Index show the spread development
for the most liquid investment grade CDS contracts in the
price a smaller risk of easier ECB policy due to less risk of deflation in Europe.
euro credit market.
We expect Reserve Bank of New Zealand to deliver a 25bp rate hike to 3% when
**The iTraxx Europe Crossover show the spread
meeting later today. The market is also quite convinced that the central bank will development of the most liquid non-investment grade CDS
deliver – 98% probability according to the OIS curve – but so far the central bank has contracts in the euro credit market.
taken a pretty cautious stance. A hike might send NZD slightly higher. Source: Bloomberg

Scandi Daily
From 12-30 July Danske Daily will be
No news out of Sweden, Norway or Denmark today.
published in a reduced summer edition

Senior Analyst
John Hydeskov
+45 45 12 84 97
johy@danskebank.com

www.danskeresearch.com
Danske Daily

Key figures and events

Wednesday, July 28, 2010 Period Danske Bank Consensus Previous
- DEM HICP, preliminary m/m | y/y Jul |1.0% 0.0%|0.8%
- EUR ECB publishes bank lending survey
- OTH Earnings: Boing, Peugeot
3:30 AUD CPI 2nd quarter 1.0%|3.4% 0.9%|2.9%
13:00 USD MBA Mortgage applications % 7.6
14:30 USD Durable goods orders m/m Jun 0.8% -1.1%
23:00 NZD Reserve Bank of New Zealand (cash rate decision) Jul 3.00% 3.00% 2.75%

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