Investment Research — General Market Conditions

2 August 2010

Danske Daily
Key news
Market movers today: Today
Chinese PMI points to further slowdown
Sweden PMI (8.30 CET) [Tex
Asian stock markets higher on strong earnings
Norway PMI (9.00 CET)
US 10-year bond yields close to this year’s lows
US ISM (16.00 CET) – we look for
Markets looking ahead to US ISM today and the US employment report Friday a further decline to 55 in July from
56.2 in June

Markets Overnight Fed chairman Bernanke speaks on

the economy (16.15CET)
Chinese PMI weakened further in July in a further sign that the Chinese economy is
slowing down. The HSBC PMI fell to 49.4 in July from 50.4 in June. It is the weakest
level since March 2009. A separate PMI index released by the National Bureau of Market overview
Statistics on Sunday showed a decline to 51.2 in July from 52.1 in June. Both indices 07:30 1 day +/-,%

indicate that tightening measures from the government are working to cool the Chinese S&P500 (clo se) 1101,6  0,01
S&P500 fut (chng fro m clo se) 1105,8  0,68
economy - see Bloomberg story. Nikkei 9566,2  0,30
Hang Seng 21304,2  1,31
Despite the softer Chinese data Asian stock markets have increased to an 11-week high
17:00 07:30 +/-, bp
adding to the positive trend starting in early July. Positive earnings reports from Honda
US 2y gov 0,57 0,55  -1,6
and Hyundai among others continue to boost sentiment. After the steep decline during US 10y gov 2,94 2,92  -1,8
spring the markets have to some extent been priced for weaker growth.
iTraxx Europe (IG) 100 106  6,1
iTraxx Xover (Non IG) 392 485  92,6
In US stock markets the S&P500 future was also up close to 1% overnight after closing
+/-, %
flat on Friday on the back of disappointing US GDP data. GDP rose 2.4% at an EUR/USD 1,304 1,308  0,32
annualised quarterly rate with 1.1% points coming from inventories. Private consumption USD/JPY 86,710 86,500  -0,24
EUR/CHF 1,36 1,36  -0,14
growth was sluggish and revised lower for the previous quarters leaving some doubts that EUR/GBP 0,831 0,832  0,07
EUR/SEK 9,418 9,403 -0,16
growth can be sustained in coming quarters as the inventory boost is coming to an end – EUR/NOK 7,91 7,93

 0,19
see also WSJ. A stronger-than-expected Chicago PMI late Friday eased some of the
USD
fears, though, and stock markets managed to climb back out of red territory. Oil Brent, USD 77,1 78,3  1,57
Gold, USD 1174,5 1183,5  0,77
US bond yields fell further Friday to a 10-year yield of 2.9% close to this year’s low of Note:
* The iTraxx Europe Index show the spread
2.85%. The mixed data picture has left investors comfortable that Fed will not raise rates development for the most liquid investment grade CDS
anytime soon. This adds to demand for higher-yielding longer maturities. This week the contracts in the euro credit market.

market will be looking for further clues on the outlook from the ISM today and non-farm **The iTraxx Europe Crossover show the spread
payrolls report Friday. development of the most liquid non-investment grade
CDS contracts in the euro credit market.
In FX markets EUR/USD is slightly higher while USD/JPY is broadly unchanged Source: Bloomberg
compared to the European close Friday. There have been no big movements in Scandi
markets.

Chief Analyst
Allan von Mehren
+45 4512 8055
alvo@danskebank.dk

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Danske Daily

Global Daily
Focus today: In the morning attention will be on earning reports from BNP Paribas and
How fast will the US ISM decline?
HSBC holdings. Global manufacturing PMIs are released today. With Eurozone flash
estimates already released, the main event is the US ISM, where we expect a moderate 65 Index
Index
65
60 60
decline to 55. Later in the afternoon Fed Chairman Bernanke will deliver a speech on the
55 55
economy and state governments. Audience Q&A is expected and could prove interesting. 50 50
In the evening US Treasurer Geithner will comment on the financial reform. 45
ISM manufacturing
45
40 40
Fixed income markets: In the past couple of weeks US bond yields have been relatively 35 35
30 30
unaffected by the recovery in risk appetite, as the markets seem to focus more on the 00 01 02 03 04 05 06 07 08 09 10
mixed evidence from incoming economic data. In Germany, however, bond yields have
moved higher with fears of southern European debt easing a bit and economic data Source: Reuters Ecowin
beating expectations. Today focus will be on PMI data – in particular the US ISM – and
Bernanke’s comments in the afternoon. Further, the US Treasury will release financing
estimates for the coming six months. US S&P500 future

1113 1113
1103 1103
1093 1093
1083 1083
1073 1073
1063 1063
Thu Fri Tue Wed Thu Mon
Source: Danske Markets

US 10y gov yield

Key figures and events
3.11 3.11
Monday, August 2, 2010 Period Danske Bank Consensus Previous
- OTH Earnings: BNP Paribas, HSBC Holdings 3.01 3.01
8:30 SEK Swedish PMI Index Jul 62.4 62.4
9:00 NOK Norwegian PMI Jul 52.0 51.2 2.91 2.91
9:15 ESP PMI Manufacturing Index Jul 51.8 51.2
9:15 CHF Retail sales y/y Jun 3.8% 2.81 2.81
9:30 CHF Manufacturing PMI index Jul 65 65.7
Thu Fri Mon Wed Thu Mon
9:30 DKK Retail sales, volume m/m|y/y Jun 3.7%|0.3%
9:45 ITL PMI Manufacturing Index Jul 55.0 54.6 54.3
Source: Danske Markets
9:50 FRF PMI Manufacturing, Final Index Jul 53.7 53.7 53.7
9:55 DEM PMI Manufacturing, Final Index Jul 61.2 61.2 61.2
10:00 EUR PMI Manufacturing, Final Index Jul 56.5 56.5 56.5
10:30 GBP PMI Manufacturing Jul 57.0 57.0 57.5
11:00 DKK Danish PMI Jul 49.3
Global FX
16:00 USD ISM manufactuuring Index Jul 55.0 54 56.2
EUR/USD (LHS) USD/JPY (RHS)
16:00 USD ISM prices paid Index Jul 54.5 57.0
16:00 USD Construction spending m/m Jun -0.5% -0.2% 1.315 88.1
16:15 USD Bernanke speaks on the economy
87.4
22:00 USD Geithner speak on financial reform 1.295
86.7

1.275 86
Thu Fri Tue Wed Thu Mon

Source: Danske Markets

Scandi FX
EUR/SEK (LHS) EUR/NOK (RHS)
8.06
9.51 8.02
9.47 7.98
9.43 7.94
9.39 7.90
Thu Fri Tue Wed Thu

Source: Danske Markets

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Today’s market data: 02 August 2010

STOCKS
S&P500 Intraday, % Eurostoxx Intraday, %
1.70 1.7 Clo se +/-
1.20 1.20
DJSTOXX50 2476  -0.4%
1.20 1.2
Max 1.4 Max 1.7 OM XC20 411  -1.0%
0.70 0.70
Min -0.3 0.70
Min -0.3 0.7
OM XS30 1047  -0.2%
0.5 0.5 OSE B X 358  0.0%
0.20 0.20
0.20 0.2
Clo se +/-
-0.30 -0.30 -0.30 -0.3 DOW JONES 10466  0.0%
15 16 17 18 19 20 21 09 10 11 12 13 14 15 16 17 18 NA SDA Q 2255  0.1%
Grey line indicates closing of Danish markets
Grey line indicates opening of US markets
1mo nth  7.7% 1mo nth  7.8% S&P 500 1102  0.0%
Year-to -date  -1.2% Year-to -date  -4.2% NIKKEI (07:30) 9566  -0.4%

FX & COMMODITIES
O il,
EUR/USD Intraday E UR 17:00 07:30 +/- G o ld, $ B re nt , $
130.8 130.8 USD 130.36 130.78  0.42 07:30 1183.54 78.28
JP Y 113.03 113.12  0.09 1day  2.54  0.10
130.4Max ## 130.4 GB P 83.15 83.20  0.06 1mo nth  -28.06  6.63
Min ## NOK 791.09 792.56  1.47 Year-t-date  86.59  0.35
130.0 0.4 130.0 SEK 941.79 940.25  -1.54
DKK 745.09 745.08  -0.01 CRB C R B , R aw
129.6 129.6 P LN 400.34 400.38  0.04 1M f ut ure Indus t ria ls
07 10 13 16 19 22 01 04 US D 17:00 07:30 +/- 07:30 274.35 484.93
JP Y 86.71 86.50  -0.21 1day  4.15  0.68
1mo nth  5.12 GB P 156.78 157.19  0.41 1mo nth  19.87  7.72
Year-to -date  -12.43 CHF 104.53 104.04  -0.49 Year-t-date  -9.03  1.44
* The chart plot s 07:30 - 23:00 Fri and 23:00 Sun t o 07:30 Mon

YIELDS & INTEREST RATES

USD-Yields Intraday S pre a d,
P o lic y R a t e 3M bp 17:00 07:30 +/-, bp
0.65 USD2Y USD10Y USD 0.25 0.45 20 USD 10Y 2.94 2.92  -2
3.04
Max 0.7 Max 3.1 EUR 1.00 0.90 -10 USD 30Y 4.02 4.00  -2
0.61 Min 0.5 Min 2.9 2.99
GB P 0.50 0.75 25 JP Y 10Y 1.07 1.05  -2
0 0 DKK 1.05 1.15 10
0.57 2.94 SEK 0.50 0.93 43 07:30(-1)* 17:00 +/-, bp
NOK 2.00 2.62 62 DEM 10Y 2.69 2.68  -2
0.53 2.89 P LN 3.50 3.72 22 DKK 10Y 2.81 2.76  -5
07 10 13 16 19 22 01 04 SEK 10Y 2.78 2.75  -3
USD2Y (lhs) USD10Y (rhs) NOK 10Y 3.35 3.35  0
P LN 10Y 5.84 5.89  5
* The chart plot s 07:30 - 23:00 Fri and 23:00 Sun t o 07:30 Mon * As of closing previous trading day

10Y Yield Spread to Germany

US Yield Curve German Yield Curve
4.0 4.0 3.0
3.21 3.0
-0.8 -0.2
3.0 3.0 2.5 -0.7
2.5
2.0 -1.8 -1.2
2.0 2.0 2.0 -1.7
1.29 -2.8
1.5 -2.2
1.0 0.66 0.68 1.0
## M ax 0.000 1.5 ## M ax # # # -2.7
0.25 0.28 1.0 -3.8
0.090.08 ## M in -5.770 1.0 ## M in # # # -3.2
0.0 0.0 0.5 -4.8 -3.7
0.5
-4.2
USD JPYGBPFRF ITL DKKSEKNOKPLN 0.0 -5.8
-1.0 -1.0 0.0 -4.7
USD2Y USD5Y USD10Y
DEM2Y DEM5YR DEM10Y
-2.0 -1.62 -2.0 D-t-D +/-, bp (right axis)
07:30 (left axis) D-t-D +/-, bp (right axis)
1 month ago (left axis) 07:30 (left axis)
1 month ago (left axis)

C re dit s pre a d, iT ra xx s . 11* Credit spreads S wa p S pre a d, bp**

160 700 17:00 07:30 +/-

07:30 1day 1mo nth 140 600 USD 10Y -2 -1  1
Euro pe (IG) 106  1  -22 120 500 JP Y 10Y 8
100
HiVo l 154  2  -32 400
80
Xo ver (N-IG) 485  3  -88 300 07:30(-1)* 17:00 +/-
60
40 200 EUR 10Y 26 28  2
20 100 DKK 10Y 35 38  2
Finan. Sr. 113  1  -42 0 0 SEK 10Y 30 32  2
Finan. Sub. 173  2  -63 Aug Sep Nov Dec Jan Mar Apr Jun Jul NOK 10Y 69 67  -2
No n-finan. 173  2  -63 iTraxx Europe (IG) (left axis)
iTraxx Xover (Non IG) (right axis) * As of closing previous trading day
* Ask price ** Ask price

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