Investment Research

06 August 2010

Weekly Focus
Europe strikes back

Market Movers ahead

 In the US the FOMC meeting is the main event next week. We believe that the
Contents
speculations about further monetary easing are premature, but that the assessment of
the current economic situation will be downgraded. We expect US July retail sales Market movers ahead ........................................... 2
to increase 0.5% m/m after a weak H1 2010. Global update: Euro shining – for now .... 5
Scandi update ................................................................. 8
 For the euro area, the key event next week is expected to be the release of Q2 GDP Fixed income: Slowdown fears to keep
data. We expect to see robust growth, but at a rather uneven pace. Germany is bond yields low ............................................................... 9
expected to stand out as the top-performer. FX: Dollar under pressure – for now ....10
Commodities: No summer lull ..................11
 UK inflation report on Wednesday is expected to weigh on GBP and support Gilts. Credit ...................................................................................12
 In Scandinavia focus turns to inflation numbers out of Denmark, Sweden and Financial views...........................................................13
Norway. The monetary policy meeting in Norges Bank will not attract much attention. Macroeconomic forecast ..............................14
Financial forecast ...................................................15
Unchanged rates are widely expected.
Calendar ...........................................................................16

Global Update
 Over the past month the euro area has been the main provider of good news while US
data have disappointed. The German Ifo index, German factory orders and Euro PMI
all surprised to the upside, while US data covering housing, business and consumption
have all been weak.

 The relative stronger numbers out of the euro area relative to the US and less PIIGS
concern have pushed EUR/USD above 1.32.

 Wheat prices rise strongly on Russian drought and subsequent export ban. A new food
crisis cannot be ruled out if the export ban spreads to other countries like we saw in
2008. However, global wheat stocks are in fact plenty and other grains prices are not
rising to the same degree.

Germany to show very strong growth US: ISM data still signal growth
2 % q/q 2 65.0 Index Semi ann. chg, % AR 8
GDP growth in... Germany
1 1 60.0 6
Euro area
0 0 4
55.0
France 2
-1 -1 50.0
0 Editors
-2 -2 45.0
-2
GDP >>
-3 -3 40.0 -4 Allan von Mehren
<< Weighted ISM
-4 -4 35.0 -6 +45 4512 8055
08 09 10 98 00 02 04 06 08 10 alvo@danskebank.dk
* 'Weighted ISM = 0.15 * ISM manu + 0.85 * ISM non-manu

Steen Bocian
Source: Reuters Ecowin and Danske Markets Source: Reuters Ecowin and Danske Markets +45 45 12 85 31
steen.bocian@danskebank.dk

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Weekly Focus

Market movers ahead

Global
 In the US the FOMC meeting is the main event next week. Recently, speculation of
further easing has intensified. However, we believe that it is premature for the Fed to US: Retail sales set to improve
announce new easing measures at the upcoming meeting. That said, it is quite certain 2.5 % m/m % m/m 2.5
that the assessment of the economic situation will be downgraded following a range 2.0 2.0
Retail sales
1.5 1.5
of disappointing economic data. Hence, the Fed will continue to communicate that 1.0 1.0
0.5 0.5
yields will remain exceptionally low for an extended period. It will be interesting to 0.0 0.0
see if Plosser votes against the extended period language again. If not, it will be a -0.5 -0.5
-1.0 -1.0
dovish sign. -1.5 -1.5
-2.0 Retail sales ex autos, -2.0
-2.5 gasoline and building materials -2.5
July retail sales will provide important information about the trend of consumer 09 10
spending after downward revisions and soft data in the first half of the year. We
expect improvement with a 0.5% m/m increase in overall sales. Car sales already Source: Reuters Ecowin
reported for July have been solid and rising gasoline prices will contribute positively
as well. The underlying pace of spending is likely to improve at a healthy 0.4% m/m
following a weak reading in April and May, but a better one in June. Michigan
consumer confidence is released Friday.
Finally, the July CPI data will be released. We expect core inflation to remain very
low with a 0.0% m/m reading consistent with an unchanged annual rate of inflation at
0.9%. The headline will be boosted slightly by higher gasoline prices to 0.2% m/m up
from -0.1% m/m.
 For the euro area, the key event next week is expected to be the release of Q2 GDP
data. We expect to see robust growth, but at a rather uneven pace. Germany is Germany to show very strong growth
expected to stand out as the top performer. We expect German GDP to have expanded 2 % q/q 2
GDP growth in... Germany
1.3% q/q in Q2, up from 0.2% in Q1. French GDP is expected to have advanced 0.7% 1 1
Euro area
q/q during Q2. PIIGS countries are expected to have seen very limited growth. For the 0
France
0

euro area we expect robust growth at 0.7% q/q, which compares with a mere 0.2% q/q -1 -1
-2 -2
in Q1. It is mainly exports that support increased activity while private demand
-3 -3
remains sluggish. Q2 is expected to mark a peak in growth and we expect momentum
-4 -4
to decline during H2 2010, although Q3 should produce growth above trend too. 08 09 10

 In the UK, BoE’s Inflation Report due Wednesday will be the one to watch next 125 N l f f I d k 110

week. Despite CPI being at 3.2% y/y and annual price increases having been above Source: Reuters Ecowin and Danske Markets
BoE’s target of 2% in 41 of the past 50 months, the BoE isn’t particularly worried 
about price pressures at present. We think projections will show that inflation will
edge lower on the medium-term horizon and economic growth will be revised
downwards, i.e. the Report will be GBP negative. Nationwide’s consumer confidence
index is likely to edge lower on Tuesday night. GBP is expensive according to our
short-term models and we see only limited scope for additional gains against the euro. China slowing down
 In Asia there will be extra focus on the Chinese data for July given the recent signs of 65 Index 25.0
% y/y
22.5
slowdown. Industrial production is expected to weaken as signalled by the decline in Industrial production>>
20.0
Chinese PMI in recent months. Retail sales should stay fairly robust though with 55 17.5
15.0
growth rates above 18% y/y. Next week also brings data on the trade balance, fixed 12.5
investments and house prices which should give a further clue of how much the 45 10.0
7.5
tightening measures of the Chinese authorities are cooling activity. In Japan focus is << New Orders, HSBC PMI 5.0
35 2.5
on the Bank of Japan meeting. Data have softened somewhat recently and JPY is 04 05 06 07 08 09 10
trading at record strong levels against USD. This is not what you want to see when
you are dealing with deflation and it clearly puts Bank of Japan in a tight spot. We Source: Reuters Ecowin
could soon see further QE from Bank of Japan.

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Weekly Focus

Scandies
 In Denmark attention will focus especially on June goods exports, due out Monday,
as exports look likely to play an important part in the continued economic recovery, Denmark: Goods exports rebounding
given the generally weak consumption indicators in Q2 10. Monday will also see the
release of June current account numbers, which are expected to show a surplus of
DKK6bn and hence a continued record high 12-month accumulated surplus. Industrial
production data for June and inflation numbers for July will be released Tuesday. We
expect headline inflation to increase from 1.7% in June to 1.9% in July.

 In Sweden, the release of inflation numbers for July will be a key event in the week
ahead. We have taken a quick look at the possible impact from soaring wheat and
other agricultural commodity prices (AC prices for short) on Swedish inflation. Wheat Source: Reuters EcoWin
prices are up almost 60% over the past month and this is a potential inflation threat
via rising food prices. The data suggest that 20-25% of the rise in AC prices are
sipping through to the consumer. Hence, a rise in AC prices by 10% would raise Sweden: Inflation in agricultural
commodity prices a risk in autumn
consumer food prices by about 2%. Other components worth considering are
mortgage costs, petrol and electricity prices. Mortgage costs are expected to rise on
the back of the Riksbank’s coming rate hikes. There is no change to call here. Petrol
prices, however, are likely to show almost a 3% decline, which is new. Electricity
prices probably rose in July but now appear to be falling even faster going into
August. The overall revision to our inflation forecast is slightly downward. Upside
risks for the next couple of months probably stem from higher mortgage costs (which
may be underestimated) and soaring AC prices. The downside stems from the
appreciating SEK. We may not have seen the entire impact on CPI from that yet. We Source: Statistics Sweden

forecast July CPI and CPIF (CPI with fixed mortgage rates) to print -0.1% m/m /
1.2% y/y and -0.3% m/m / 1.7% y/y, which means CPI is rising while CPIF is falling.
Norway: Still low core inflation
 In Norway, the policy meeting at Norges Bank on 11 August is not expected to attract
3.5 3.5
much attention. At its latest policy meeting, Norges Bank made it clear that interest 3.0
% y/y % y/y
3.0

rate hikes would be paused. Although we have seen some improvement in the 2.5
CPI core
2.5

2.0 2.0
financial markets over the past month and indicators, particularly in the eurozone and 1.5 1.5

1.0 1.0
to some extent in Norway, have surprised on the upside, we do not expect Norges 0.5 0.5

Bank to change its rhetoric much at the meeting – anything else but unchanged rates 0.0 0.0

-0.5 -0.5
would be a major surprise. The coming week will also see the release of inflation 00 01 02 03 04 05 06 07 08 09 10

numbers. We expect underlying inflation to increase from 1.3% y/y to 1.5% y/y.
Headline inflation should edge up marginally from 1.9% to 2.0%. Retail sales have Source: Reuters EcoWin
generally shown a disappointing performance so far this year. However, we expect
some catching-up in June, with retail sales set to grow 0.6% m/m after falling 0.1% in
May.

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Weekly Focus

Market movers ahead

Global movers Event Period Danske Consensus Previous
Tue 10-Aug - CNY Trade balance USD bn Jul 19.60 20.02
- JPY BoJ Monetary Policy Announcement % 0.10 0.10 0.10
20:15 USD FOMC meeting % 0.25 0.25
Wed 11-Aug 1:01 GBP Nationwide Consumer Confidence Jul 63
4:00 CNY Retail sales value y/y Jul 18.5% 18.3%
4:00 CNY Industrial production y/y Jul 13.4% 13.7%
4:00 CNY Fixed assets investments y/y Jul 25.3% 25.5%
11:30 GBP Bank of England Quarterly Inflation Report
Fri 13-Aug 11:00 EUR GDP, s.a. q/q|y/y 2nd quarter 0.7%|1.4% 0.7%|1.4% 0.2%|0.6%
14:30 USD CPI m/m|y/y Jul 0.2%|1.2% 0.2%|1.2% -0.1%|1.1%
14:30 USD Retail sales m/m Jul 0.5% 0.4% -0.5%
15:55 USD University of Michigan Confidence Index Aug 69.0 69.8 67.8
Scandi movers Event Period Danske Consensus Previous
Mon 09-Aug 9:30 DKK Current account DKK bn Jun 6.0 6.7
Tue 10-Aug 9:30 DKK CPI m/m|y/y Jul -0.4%|1.9% -0.2%|1.7%
Wed 11-Aug 14:00 NOK Norwegian Deposit Rates % 2.0 2.0 2.0
Thurs 12-Aug 9:30 SEK CPI change m/m|y/y Jul 0.0%|0.9%

Source: Bloomberg and Danske Markets

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Weekly Focus

Global update: Euro shining – for now

German locomotive picking up speed
No one expected it. But it probably had to happen sooner or later. Over the past month the
Relief in Spain as debt crisis calms
euro area has been the main provider of good news while US and Asian data have
down
disappointed. The German Ifo index, German factory orders and Euro PMI all surprised
2.50 10y gov spread to Germany, % point 2.50
to the upside. And in financial markets we have witnessed considerable improvement in 2.25 2.25
2.00 2.00
Spain
PIIGS bond markets with especially Spanish yields coming down – see Monitor: Euro 1.75 1.75
1.50 1.50
debt crisis watch published yesterday. 1.25 1.25
1.00 1.00
0.75 0.75
This is clearly good news, but we would strike a word of caution. The question is whether 0.50 0.50
0.25 0.25
this is a sign of renewed European strength or whether it just reflects the usual lag in the
Aug Oct Dec Feb Apr Jun
business cycle to the US and Asia, i.e. the strength in the euro area is a consequence of 09 10

the boom seen in the US and Asia in the beginning of the year. We tend to believe so and Kilde: Reuters Ecowin
expect to see some slowing of euro area growth towards the end of the year as a reflection
of the slowing in the US and Asia currently.
Euro area shining – or just lagging?
On the positive side there are signs that euro area investment growth is picking up, but
this is mainly due to the improvement seen in the industrial sector on the back of strong 70 Index Manufacturing PMI, new orders Index
70

exports. So investment is to a wide extent also driven by external demand. 60 60

China
50 50
Looking at the euro area consumption growth things are still not looking too good. We 40
Euro area
40
expect consumption growth to pick up somewhat as the labour market is improving, but USA
30 30
in the end the business cycle in the euro area is likely to be governed by the global 20 20
business cycle as is usually the case. So it is unlikely that the euro area can continue to 07 08 09 10

shine unless the global recovery stays on track. There are increasing signs that global
Kilde: Reuters Ecowin
growth will slow down in coming quarters, which is likely to be felt in the euro area as
well– see Business Cycle Monitor: Asia leads the global slowdown.
Euro consumers still not pulling much
ECB: Too early to declare victory of global demand
The ECB meeting did not bring any surprises and the press statement included only minor 1.15 Mn
Index
105
1.10 104
changes. The ECB kept its refi rate unchanged at 1.0% and did not renew any non- 1.05 103
1.00 102
standard measures. The market reaction was limited. Trichet emphasised that the recovery 0.95 101
0.90 100
was strengthening in Q2 and that available data for Q3 were better than expected. But he 0.85 99
0.80 << Car sales 98
also repeated that it was too early to declare victory and that growth would likely slow in 0.75 97
Euroland retail sales >>
the second half of 2010. We expect the ECB to stay cautiously on the exit path and we 0.70 96
03 04 05 06 07 08 09 10
still anticipate a first hike in H2 11 – see Flash Comment: Trichet will not declare victory
yet. Kilde: Reuters Ecowin

Another food price crisis brewing as wheat prices shoot higher

Wheat prices have shot markedly higher over the past weeks as a severe Russian drought Wheat prices spiking
is limiting supply. Prices spiked further on Thursday as Russia announced a ban on wheat
475 Index Wheat prices >> Cents 1300
exports, which is starting to have a spill-over effect on other soft commodities such as
425 1100
soybeans and corn. This should be watched closely in the near future as it could spiral
375 900
into another food price crisis if the price rise continues. A rise in food prices acts as a tax
325 700
on consumption and could put a further brake on the world economy, which could be
275 500
critical as growth is already facing headwinds and showing signs of slowing.. << CRB foodstuffs subindex
225 300
06 07 08 09 10

Kilde: Reuters Ecowin

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Weekly Focus

In 2007-2008 food price inflation rose to 6-7% in both the US and the euro area. As food
weighs 15% in US and 20% in the euro area this had a considerable effect on inflation.
The impact is even higher in emerging markets where food has a much higher weight in
the consumption basket.

US recovery continues to lose pace

Over the past couple of months, incoming US economic data have been surprisingly
weak, a sign that the recovery is losing pace into H2. Overall the weakness has been US: Very weak home sales data
widespread: housing, business and consumption data. This trend has continued
7.5 ml units, SAAR Index, SA 135
throughout July, but with a few exceptions. 7.0 125
<< Ex home sales
6.5 115
Housing data continue to be very soft as the effect from the expiration of the first time
6.0 105
home buyer tax credit ripples through the housing market. Recent evidence suggests that 5.5 95
Pending home sales,
the weakness continued into July, with June pending homes declining to a new record 5.0 lagged 1 month>> 85

low. While the current housing data probably seriously understate the true trend in 4.5 75
00 01 02 03 04 05 06 07 08 09 10
housing, the magnitude of the post tax-credit setback has surprised us. If home demand
does not begin to recover soon, home prices could face another setback, which could hit Source: Reuters Ecowin and Danske Markets
the financial sector. In any case there is little doubt that residential construction will be a
negative for growth in Q3 and will probably not contribute much positive in Q4.

The softening in both hard and soft business indicators had been expected, but has been
somewhat deeper than expected. We suspect that the financial turmoil in late spring and US: ISM data still signal decent growth
early summer created by the euro debt jitters has led to extraordinary caution in the 65.0 Index Semi ann. chg, % AR 8
60.0 6
business sector. Both orders and hiring have simultaneously slowed. However, the recent
4
55.0
ISM reading adds some comfort as the manufacturing index slowed much less than feared 2
50.0
0
and the non-manufacturing index surprisingly rose. In our view this might be the first sign 45.0
-2
GDP >>
that some of the recent weakness has been amplified by the euro crisis and that this might 40.0
<< Weighted ISM
-4
35.0 -6
reverse in the coming months.
98 00 02 04 06 08 10
* 'Weighted ISM = 0.15 * ISM manu + 0.85 * ISM non-manu
Until last Friday the available economic data showed that consumption had expanded by
3.0% q/q AR in Q1 and close to 2.5% q/q AR in Q2. However, with the release of the Source: Reuters Ecowin and Danske Markets

advance national accounts, the picture changed dramatically. Q1 consumption growth was
revised lower to 1.9% q/q AR and Q2 consumption printed a much lower-than-expected
1.6%. The bad news is that the slower pace of consumption growth makes the US
"[Heading 2]"

recovery look less resilient, as we need final consumption to be strong enough to feed US: A brand new consumption profile
investment and job creation. 9.50 bln 2005 USD
bln 2005 USD,
9.50
9.45 9.45
Pre-revision personal consumption
9.40 9.40
9.35 9.35
The bottom line is that the flow of data in the recent month leaves us with a slower pace 9.30 9.30
9.25 9.25
of growth and lesser degree of resilience in the US economy. Hence, not only is our 9.20 9.20
current 3% H2 growth forecast probably a notch too high, but the risk of a sharper 9.15 9.15
9.10 9.10
Post-revision personal consumption
slowdown has also increased as the economy is more sensitive to adverse shocks. The 9.05 9.05
07 08 09 10
good news is that financial conditions have substantially improved given the sharp
decline in bond yields and the recent rebound in risky assets. This might reverse some of Source: Reuters Ecowin and Danske Markets
the front-loaded slowing caused by the turmoil in the spring.

Clear signs of slowing in China

It is increasingly evident that the Chinese economy is slowing. The HSBC PMI new
orders index for July decreased again to 47.9 after falling below the 50-line already in

6| 06 August 2010
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Weekly Focus

June. Import growth has also shown some signs of moderation recently. Tightening
measures from the Chinese authorities are starting to take effect. The Chinese central
bank said on Sunday that it would stick to its credit target of CNY7500bn in new loans Japanese production growth slowing
down
this year and strictly implement the tight credit policies it adopted. A campaign to close
105 Index 3m chng, AR
energy-inefficient businesses has also contributed to a slowdown in heavy industry. 100
95
85 Industrial production >> 75
Although the slowing in China should be watched closely, it is important to stress that 75 (green is production plans 50
for July and August)
65 25
China still has fiscal and monetary room to manoeuvre. It can thus ease policy if needed 55 0
45
to sustain growth at robust growth levels. To some extent the slowing is also needed in 35 << Japan, PMI new orders -25
25 -50
order to stem inflationary pressures.
15 -75
02 03 04 05 06 07 08 09 10
There are other indications that growth in Asia is cooling off. Japanese industrial
production has stalled in recent months after seeing significant gains earlier in the year.
Kilde: Reuters Ecowin
Japanese PMI also declined in July to 52.8 from 53.9 in June. It is still above the long
term average and thus signalling growth above trend.

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Weekly Focus

Scandi update
Denmark: Renewed doubt about the strength of consumption
June’s retail sales figures, which we received in the past week, were down 1.4%
Who is right?
compared to May. Retail sales have generally been a major disappointment throughout
DKK bn Index
2010. Q2 retail sales were down 1.7% on Q1, and in June this year sales were still 190 110
<< Private consumption
hovering around January levels. In other words, retail sales provide no sign of a budding 180
105

100
recovery in private consumption. This stands in stark contrast to the GDP data from
170 95
Statistics Denmark, which have in fact shown decent consumption growth since summer Retail sales >>
90
160
2009 and where total private consumption up to and including Q1 this year rose by almost 85

3% – i.e. quite substantial consumption growth. 150

00 01 02 03 04 05 06 07 08 09 10
80

Source: Statistics Denmark and own calculations

We should therefore remember not to overinterpret the retail sales figures, as they are not
a perfect indicator for private consumption and have had considerable difficulty capturing
recent consumption developments. Nevertheless, despite our reservations about retail
sales’ usefulness as an indicator at the moment, there is no denying that the figures give
some idea about consumption developments. Given this, concern is growing that private
consumption will not keep up the pace in the coming quarters – to the detriment of
economic activity and the current stabilisation of the labour market.

The notion that domestic demand never really picked up in Q2 is also reflected in the data
for corporate sales, which were released in the past week. Domestic sales fell by 2.2%
from May to June and by 0.6% in Q2 compared to Q1. In contrast, foreign sales did
surprisingly well, with a small increase coming on top of strong growth in May. This
bodes well for exports, which have now risen by 22.6% in current prices since hitting
bottom last year. Looking just at Q2, export growth was an impressive 5.8% relative to
Q1. Hence – somewhat surprisingly – it would seem that Danish economic growth is
currently being driven more by exports than by consumption.

Norway – better indicators

Over the past week, Norwegian indicators have improved, following the disappointing
performance in the spring of 2010. The PMI rose to 54.9 in July from 52.0 in June. Norway: Rebound in PMI
During the first six months of 2010, the Norwegian PMI hovered around 50 in spite of the 70
Diff. index Diff. index
70

65 65
recovery in the global economy. So, at long last, the global recovery appears to be feeding 60 60

55 PMI 55
through to Norway’s ailing manufacturing industry. Also, the credit indicator showed 50 PMI, New ordes 50

renewed appetite for business borrowing. Meanwhile, Norwegian electricity prices have 45 45

40 40
declined significantly over the summer months, which, together with continued low 35 35

30 30
interest rates, should support retail sales going forward. 04 05 06 07 08 09 10

Source: Reuters EcoWin, Danske Markets

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Weekly Focus

Fixed income: Slowdown fears to keep bond yields low

Bond markets defer rally in risky assets
During July long bond yields in the US and Germany have been trading more or less
sideways. This is in sharp contrast to equity, commodity and credit markets where prices Key events of the week ahead
have been boosted by the rebound in risk appetite.  German 2yr auction (Aug 9)
Solid Q2 earning reports and receding fears of a southern European debt meltdown, partly  FOMC meeting (Aug 10)
helped by the results of the European bank stress tests, have triggered a rally in risky  US Tsy auction in nominal 3s,
assets markets and southern European debt markets, as relative valuations had become 10s and 30s
attractive following a painful spring. However, equity and bond markets have completely
 Euro area GDP (Aug13)
decoupled as illustrated in the chart to the right. In fact, US 10-year yields have continued
to test new lows, as concerns about the economic outlook continue to mount on the back  US CPI (Aug 13)
of the disappointing flow of US and Chinese economic data.  US retail sales (Aug 13)

With core inflation still on a downward path and leading indicators set to soften further,  Earnings reports
we believe that bond yields in general will continue to trade in the current very low range.
Indeed, long bond yields may even decline further, even though we are trading 50-60bp
below fair value in US 10-year Treasuries according to our model. In our view, the most
likely scenario is that 10-year US Treasury yields will trade in a narrow range between
Bond yields trade sideways
2.75% and 3.25%.
4.00 % 4.00
%
German bond markets shift focus from euro to global outlook 3.75
US 10yr Treasury yield
3.75
3.50 3.50
The downward pressure on US long bond yields has effectively capped Bund yields, 3.25 3.25
which have crept only gradually higher despite extremely solid economic data out of 3.00 3.00

Germany and a significant relief rally in the (non-Greece) southern European sovereign 2.75 2.75
10yr German Bund yield
2.50 2.50
debt markets. Not even the run-up in 2-yr Schatz yields has been able to push the long Mar Apr May Jun Jul
10
end much higher. Hence, it is clear that global economic data will remain the key driver
of long bond yields in Germany as well. Source: Ecowin and Danske Markets

With growth in both the US and Asia slowing, it is feared that it is only a matter of time
before weakness shows up in Europe – and Germany. We believe the potential further
improvement in industrial indicators in Euroland is limited and that we are close to a peak
in growth momentum. Further, the ECB was relatively cautious at its meeting and did not Bonds decouple from risk appetite
signal any imminent tightening.
1250 4.0
Index %
On the back of the significant improvement in southern European debt markets and with 1200 3.8
<< S&P500 3.6
growth momentum to slow, it is difficult to argue for substantially higher long bond 1150
3.4
yields in Germany. Going forward we expect 10-yr Bunds to trade in the range between 1100
3.2
2.50 and 2.75%. 1050 3.0
1000 US 10-year Treasury yield>> 2.8
FOMC meeting to dominate bond markets next week Apr May
10
Jun Jul Aug

Next week’s Fed meeting will be the main event for global bond markets. A more dovish
Source: Ecowin and Danske Markets
Fed is likely to fundamentally support the current very low level of US 2-year bond
yields, but will probably not be able to push them lower. Following the announcement
there might even be a minor risk of disappointment given the recent talk about more QE,
which we find premature. It will also be important to see if Hoenig dissents again. If not it
would be a dovish sign.

Senior Analyst
Peter Possing Andersen
+45 45 13 70 19
pa@danskebank.dk

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Weekly Focus

FX: Dollar under pressure – for now

The dollar has had a particularly rough summer, losing more than it gained in May.
There were several reasons for the turbulence. First, US data have been so miserable that Weekly changes against EUR
many market observers have begun to question the robustness of the US recovery and NOK
even fear that the US central bank (Fed) might be forced to consider a new round of CAD
quantitative easing, i.e. extraordinary purchases in the government and mortgage bond GBP
AUD
markets. Second, US yields have hit new lows and the market has almost completely
SEK
given up on rate hikes from the Fed within the next year. In contrast, European data have JPY
been surprising positively – perhaps because analyst expectations were at rock bottom – USD
and the European bank ‘stress test’ at least did not make things any worse than they were. NZD
CHF
Finally, equity and commodity prices have risen on the back of solid global corporate
earnings in Q2, and this has also helped floor the greenback. -2% -1% 0% 1% 2%

The big question now is whether the dollar’s summer slump marks the start of an
extended period of dollar weakness or if what we have seen has simply been a Source: Danske Markets

correction after the euro’s pronounced downturn in the early part of the year.

In our view the dollar is clearly heading lower in the short term but not necessarily on the
EUR/USD vs. global equities – still
verge of chronic frailty. Even though the US economy faces a couple of challenging
some correlation, but not as solid
quarters, and while private consumption has not picked up, the housing market still looks
rather depressed and improvements in the labour market are slow in coming, the outlook
nevertheless remains brighter for the US than for Europe, where a marked tightening of
fiscal policies will almost certainly drag growth considerably lower.

We expect the dollar to continue to weaken in the short term, driven by strong equity
markets and accommodative Fed rhetoric: USD/DKK at 5.50 is not impossible. As the
market adjusts its expectations on US data, the key numbers will begin to look better and
the Fed will be in a position to tighten its tone – as some central bank members are
already urging. Another factor that could send the euro down and the dollar up is a Source: Danske Markets
slightly more balanced risk environment where investors do not simply back pro-cyclical
assets. We see a strong probability of USD/DKK up around 6.20 within six months.
USD/JPY vs. relative rates – very
Strong yen a bugbear for Japan close correlation
An interesting FX cross worth following at the moment is USD/JPY, which continues to
drift lower. Disappointment over US data and hence declining US yields explains some of
the movement, but much of the yen’s recent strength is also due to China’s aggressive
buying of Japanese government bonds. China’s USD2.5trn currency reserve is continuing
to swell at a rapid pace and only a small share of it is assumed to be in yen. If China
carries on buying Japanese government bonds, the yen could strengthen further. Some
speculate that the yen could break below 79.75, the lowest level ever, reached in April
1995, but Japanese politicians are aware that an overly strong yen would harm exports
unnecessarily. We see the right place for USD/JPY as being between 90 and 100. Source: Danske Markets

Swiss franc on the retreat

The Swiss franc has lost some of the strength gained when the European debt crisis was at
its height. Improved risk appetite and low Swiss inflation numbers can explain much of
the retreat. We would still urge caution with the franc, however, as it could easily pick up
a good tailwind if equity market sentiment were to turn.

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

10 | 06 August 2010
www.danskeresearch.com
Weekly Focus

Commodities: No summer lull

Recent developments: upsurge as growth outlook deteriorates
During July, commodities saw a remarkable rally in wheat (see details below) while
prices of base metals and oil also surged as market sentiment improved on better-than- Monthly changes
feared Euroland data. Milling wheat has risen to above EUR200/t and oil prices passed
USD82 earlier this week. In the aluminium market, physical premiums have continued to LIFFE Wheat
rise, suggesting that despite ample stocks, the spot market is in fact fairly tight. There are Gold
also signs of tightness in the copper market, which recorded a deficit in the first four Copper
months of the year. However, the growth picture in other regions – notably China and the
Aluminium
US – has in fact deteriorated somewhat of late. Crucially, US oil stocks have remained
API2 coal
stubbornly high and there have been few signs of the usual seasonal draw during the
summer period. Indeed, OECD forward demand cover is at a high 61 days, and the ICE Brent

improvement in manufacturing activity in H1 has entailed little inventory rundown. With -5 5 15 25 35 45

fundamentals in the oil market increasingly discouraging, we look for prices to head % m/m
below the USD80 mark again before moving more firmly into the USD80-90 range Source: Bloomberg, Danske Markets.
towards the end of the year.

Wheat rally looks overdone but could spur regulatory changes

Wheat prices have surged over the past month, recently touching highs not seen since Week ahead
early December last year. The main reasons for the surge have been weather related:
notably an ongoing drought in Russia and very dry weather in Europe combined with  EIA Short-Term Energy (Tue)
heavy rains in Canada have led to market fears that the harvest this season could be lower
than previously expected. As a result, some countries including Russia have said that they  IEA Oil Market report (Wed)
will limit exports considerably in order to contain price rises at home. Further adding to
 USDA WASDE report (Thu)
problems on the supply side is the fact that upcoming Indian monsoon rains could lead
the quality of existing stockpiles to deteriorate/rotten, which could lead to two very  OPEC monthly report (Fri)
different scenarios: either that India will flood the market with wheat and thus induce a
price slide in the near term, or that global inventories will decline rapidly and thus put
upward pressure on prices.
Looking at the broader fundamental picture, the story about wheat however remains one
of booming stocks on the back of some record harvests in recent years. The recent price Wheat: market tightness and prices
surge thus comes on the back of a long period of stalling prices. Global stocks are at
historically very high levels and consumption has not risen accordingly, leaving the
stocks-to-use ratio in e.g. the US at close to 50%, suggesting a very loose market (a
‘normal’ level for this ratio is 20-40%). Notably, speculators have been massively short
wheat at CBOT since the start of the year but lately there has been some reporting of
short covering as prices have risen, i.e. investors exiting bets that prices will fall.
From a structural perspective, the potential threat to crops from wheat rust in the longer
run is also looming. On the whole, the outlook for wheat prices thus seems extraordinarily
Source: EcoWin, Danske Markets
high at the moment. While the recent price rise looks a bit overdone in our view, we
cannot rule out further price rises in the short term. The next thing to look out for in the
market is the first estimates of crop yields soon to be published. The next WASDE report
from the US Department of Agriculture is due for release on 12 August.
In the longer term, the surge in grains such as wheat, soybeans and corn could lead the
authorities to re-consider regulation in the commodity sphere. Albeit the latest rally could
turn out to be little more than a bump on the road, policymakers may well decide that
time could is ripe for extending the recent overhaul of the financial sector in the US to
explicitly include trading in commodities as well.
Senior Analyst
Christin Tuxen
+45 4513 7867
tux@danskebank.dk

11 | 06 August 2010
www.danskeresearch.com
Weekly Focus

Credit
Market commentary
It has been a dull weak in the credit market with modest activity and limited newsflow. A
better than expected ISM number supported credit spreads and indices continue to move iTraxx Europe (5Y CDS)
tighter. The investment grade index, iTraxx Europe, has tightened to 100bp whereas the 250
bp

high yield index, iTraxx Crossover, has tightened to 460bp. The cash market is also in
200

fine shape with demand outpacing supply although turnover is limited. Cash spreads are
150
therefore likely to continue to grind tighter in the coming weeks in the absence of
significant new supply. 100

For banks the feel-good sentiment that emerged after the CEBS stress test and the easing 50

of the Basel III proposal has remained and has recently been further underpinned by 0
Jul/07 Jan/08 Jul/08 Jan/09 Jul/09 Jan/10 Jul/10
generally strong Q2 earnings statements from the large international banks.
Source: Markit
The primary market
Summer is normally a quiet period when it comes to issuance of bonds and this one is no
exception. The changes to the Basel III proposal that were announced a few weeks ago iTraxx Crossover (5Y CDS)
have somewhat alleviated the fears that banks would need to substantially increase their 1,400
bp

issuance of bonds with long tenor as the sharp tightening of liquidity rules is postponed 1,200

until 2018. Still, we expect banks to be fairly active come end August and September as 1,000

the markets have been on hold for long periods during Q2 on the back of the southern 800

European debt crisis. 600

400
This week a new 5Y senior bond from Nordea was the most interesting transaction at a
200
swap spread +73bp.
0
Jul/07 Jan/08 Jul/08 Jan/09 Jul/09 Jan/10 Jul/10

Source: Markit

Selected new issues during the week

Bond spread on
Name Rating Coupon Maturity Currency Size issue date, (bp)*
Nordea Aa2/AA- Fixed 5Y EUR 1.25bn 73
BNP Paribas Aa2/AA- Fixed 5Y EUR 0.5bn 55
Note: Ratings are Moody's and S&P. * Mid-Swaps for Fixed, Discount Margin for floating

Source: Danske Markets & Bloomberg

Senior Analyst
Henrik Arnt
+45 4512 8504
Henrik.arnt@danskebank.dk

12 | 06 August 2010
www.danskeresearch.com
Weekly Focus

Financial views
Equities
 Despite a rally in risky assets, the gap between the stock market’s implied earnings
Equities and US 10Y yield
expectations and analysts’ expectations has yet to be closed. Although we are now
4.0
halfway through the Q2 earnings season with companies surprising on the positive 1275 Index %
1225 3.8
side, the double-dip fear among investors is still present. Both investors and
1175 3.6
companies fear 2011, especially if a slowdown in ISM is not offset by expected job 1125 3.4
creation and private consumption. Along with worsening signs in the US housing 1075
3.2
1025 << S&P500
market, this dampens the positive signals and guidance upgrades from the companies. 975 US 10-year gov bond >> 3.0
As we believe the stock market to discount too low growth expectations, we see room 925 2.8
Feb Mar Apr May Jun Jul
for performance of global equities. We reiterate our global market forecast of 10-15% 10
end-year 2010.
Source: Reuters Ecowin

Fixed Income
 Global: Global bond markets are no longer trading on risk aversion, but on economic
data. Focus has shifted from fear of a European debt meltdown to fear of a hard EUR/USD and USD/JPY
landing in the global economy, as both US and Chinese data have been consistently
165 97
weak. With the outlook for continued weakening global leading indicators, low
155 << EUR/USD 95
inflation and dovish central banks, bonds are likely to be range bound at the current 145 93
low levels in the coming months. We recommend to modestly overweight on duration 135 91
on a 3-6 month horizon. 125 89
115 87
Credit 105
USD/JPY >>
85
Aug Oct Dec Feb Apr Jun Aug
 The constructive tone in the credit market continues with spreads moving tighter both 09 10
within cash and CDS. In the coming weeks we expect cash spreads to further tighten on
Source: Reuters Ecowin
the back of more confidence within the banking sector as well as decent interest from
investors at a time where primary market activity is low. It should be stressed though that
turnover is limited.
 As such we are positive on credit for the moment. Company credit metrics are sound Credit spreads
and we thus consider the default risk in the short- to medium- term as very low. In the
27.5 % points % points 6.5
longer term, however, it is inevitable that companies will feel the negative effect from
22.5 5.5
the austerity measures currently being undertaken around Europe.
17.5 4.5

FX outlook 12.5 3.5

 EUR/USD can edge higher in the short term, driven by a soft Fed and buoyant equity 7.5 2.5
US credit spread (Baa) >>
markets. Fed’s tone will probably sharpen in autumn and winter, coinciding with 2.5 << Eur high yield spread 1.5
07 08 09 10
more euro turmoil, i.e. lower EUR/USD levels on the 3-6 month horizon. Chinese yen
buying has sent USD/JPY lower, which may continue for now. GBP is overbought
Source: Reuters Ecowin
against EUR and is a sell. CHF has a decent chance of a comeback if risk appetite
abates.
 SEK has performed on global risk appetite and strong growth momentum should
warrant lower levels of EUR/SEK going forward. NOK has benefitted from higher oil Commodity prices
price but is not backed by a central bank that raises rates here and now. 87.5 USD/barrel Index
3700
82.5 << Oil (WTI)
Commodities 3500
77.5
 Wheat has rallied on weather-related supply concerns and oil has moved firmly above 3300
72.5 3100
USD80 per barrel. In our view, current market pricing looks a bit stretched given a
67.5 2900
large stock overhang of both commodities globally. Base metals could be in for a LME metal prices >>
62.5 2700
correction as focus turns to a likely bubble in the Chinese property sector.
Aug Oct Dec Feb Apr Jun Aug
09 10

Source: Reuters Ecowin

13 | 06 August 2010
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Weekly Focus

Macroeconomic forecast
Macro forecast, Scandinavia
Private Public Fixed Stock Ex- Im- Infla- Unem- Public Public Current
1 1 1 1 2 1 1 1 3 4 4 4
Year GDP cons. cons. inv. build. ports ports tion ploym. budget debt acc.

Denmark 2009 -4.7 -4.6 3.4 -13.0 -1.7 -10.2 -13.2 1.3 3.6 -3.0 38.0 3.9
2010 1.5 2.8 1.6 -6.9 0.8 2.6 1.4 2.2 4.1 -5.6 42.1 4.1
2011 1.8 2.3 0.5 1.2 0.2 3.9 3.9 1.8 4.0 -4.5 46.5 4.1
Sweden 2009 -5.1 -0.8 1.7 -16.0 -1.5 -12.4 -13.2 -0.3 8.4 -2.1 38.9 7.2
2010 2.7 2.2 1.5 2.3 1.1 9.1 11.3 1.3 9.3 -3.5 43.6 6.3
2011 1.5 1.4 1.3 1.8 0.0 3.3 3.2 2.1 10.1 -4.1 47.2 6.6
Norway 2009 -1.6 0.2 4.8 -7.9 -2.1 -3.9 -10.3 2.1 3.1 8.0 26.0 19.0
2010 1.8 3.9 2.7 -7.2 0.8 1.1 1.9 2.5 3.3 12.0 26.0 24.9
2011 3.1 4.2 2.3 3.8 0.1 0.3 5.5 1.7 3.2 10.0 - 17.0

Macro forecast, Euroland

Private Public Fixed Stock Ex- Im- Infla- Unem- Public Public Current
Year GDP 1 cons.1 cons.1 inv.1 build.2 ports1 ports1 tion1 ploym.3 budget4 debt4 acc.4

Euroland 2009 -4.0 -0.5 2.3 -10.8 -0.8 -12.6 -11.4 0.3 9.4 -6.3 78.7 -0.7
2010 1.3 0.1 1.4 -2.0 0.4 7.9 5.8 1.4 9.8 -6.7 84.8 -0.3
2011 2.1 1.2 1.1 3.8 0.0 5.4 4.6 1.6 9.5 -6.0 88.5 -0.2
Germany 2009 -4.9 -0.1 3.4 -13.5 0.4 -14.5 -9.5 0.2 7.5 -3.5 73.0 4.0
2010 1.9 -1.0 2.1 9.9 0.1 8.9 8.8 1.0 8.1 -5.0 76.5 3.7
2011 2.7 1.7 1.4 7.4 0.0 7.0 6.7 1.2 7.6 -3.0 79.0 3.2
France 2009 -2.6 0.7 2.8 -7.0 -1.6 -10.7 -9.8 0.1 9.4 -8.3 78.0 -2.3
2010 1.6 1.3 1.7 -1.0 0.3 7.9 5.9 1.2 10.0 -8.5 82.0 -2.5
2011 1.8 1.4 1.0 4.2 0.1 6.2 6.2 1.5 9.7 -7.0 87.0 -2.2
Italy 2009 -5.1 -1.6 1.6 -13.1 -0.3 -19.2 -15.2 0.7 7.8 -5.3 114.6 -2.2
2010 1.3 0.9 1.3 0.1 0.2 8.0 6.0 1.9 8.6 -5.0 116.0 -2.0
2011 2.0 1.0 1.0 5.2 0.1 8.4 7.2 2.0 8.3 -4.5 117.5 -1.7
Spain 2009 -3.7 -5.1 5.0 -15.5 0.0 -12.0 -18.2 -0.3 18.1 -11.2 54.3 -5.2
2010 -0.3 -0.5 1.8 -5.6 0.0 7.2 4.6 0.9 20.1 -10.0 66.0 -4.1
2011 1.0 0.7 0.2 0.2 0.0 6.1 4.1 1.9 19.8 -8.5 73.0 -3.2
Finland 2009 -7.8 -2.1 0.7 -13.4 0.0 -24.3 -22.3 0.0 8.2 -2.2 44.0 1.4
2010 1.8 1.0 0.5 -3.0 0.0 4.0 3.5 1.4 9.0 -3.9 49.5 1.4
2011 2.5 1.5 0.0 4.0 0.0 8.0 5.0 2.0 8.6 -3.3 52.0 2.2

Macro forecast, Global

Private Public Fixed Stock Ex- Im- Infla- Unem- Public Public Current
Year GDP 1 cons.1 cons.1 inv.1 build.2 ports1 ports1 tion1 ploym.3 budget4 debt4 acc.4

USA 2009 -2.4 -0.6 1.8 -18.3 -0.6 -9.6 -13.9 -0.3 9.3 -9.9 83.8 -2.9
2010 3.3 2.7 0.3 2.9 1.2 12.1 11.3 1.6 9.4 -10.2 91.6 -3.9
2011 3.2 2.7 9.4 2.8 -0.4 6.4 6.4 1.6 9.4 -8.8 96.8 -3.8
Japan 2009 -5.2 -1.1 1.6 -14.4 -0.3 -24.1 -16.9 -1.4 4.7 -8.0 220.0 2.8
2010 3.3 2.2 1.6 -1.1 -0.1 23.7 2.6 -1.0 4.3 -5.2 220.4 3.4
2011 2.1 1.7 1.0 2.5 0.0 5.4 5.4 0.1 - - - 3.0
China 2009 8.7 - - - - - - -0.7 4.3 -3.3 23.6 5.8
2010 10.2 - - - - - - 3.3 4.0 -2.2 20.5 4.8
2011 9.5 - - - - - - 3.5 4.0 -2.2 20.5 5.5
UK 2009 -4.9 -3.2 2.8 -14.9 -1.2 -10.6 -13.3 2.2 7.6 -10.4 68.6 -1.3
2010 1.3 0.9 3.0 -2.0 1.1 4.4 0.9 3.2 8.0 -10.7 80.3 -2.0
2011 2.3 2.6 2.2 2.2 1.3 6.9 5.0 2.1 8.1 -8.8 88.2 -1.2

Switzer- 2009 -1.5 1.2 2.5 -3.7 1.0 -9.3 -5.7 -0.5 3.7 1.4 38.8 8.3
land 2010 2.0 1.8 0.5 2.1 -0.7 7.0 5.0 1.0 3.8 -1.0 40.0 9.0
2011 1.7 1.6 1.0 1.5 -0.2 4.0 4.0 1.2 3.5 -0.5 39.0 10.0

Source: OECD and Danske Bank. 1) % y/y. 2) % contribution to GDP growth. 3) % of labour force. 4) % of GDP.

14 | 06 August 2010
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Weekly Focus

Financial forecast
Bond and money markets
Key int. Currency Currency Currency
3m interest rate 2-yr swap yield 10-yr swap yield
rate vs EUR vs USD vs DKK
USD 06-Aug 0.13 0.42 0.73 2.90 131.9 - 565.0
+3m 0.13 0.45 1.30 3.60 125 - 595
+6m 0.13 0.45 1.45 3.60 120 - 620
+12m 0.75 1.15 1.95 3.60 127 - 587
EUR 06-Aug 1.00 0.91 1.41 2.85 - 131.9 745.1
+3m 1.00 0.65 1.30 3.00 - 125 744.0
+6m 1.00 0.65 1.35 3.10 - 120 744.0
+12m 1.00 1.00 1.65 3.40 - 127 745.0
JPY 06-Aug 0.10 0.24 0.45 1.10 113.5 86.0 6.57
+3m 0.10 0.24 0.50 1.45 120 96 6.20
+6m 0.10 0.30 0.65 1.55 120 100 6.20
+12m 0.10 0.30 1.00 1.60 130 102 5.73
GBP 06-Aug 0.50 0.74 1.41 3.32 83.1 158.6 896.2
+3m 0.50 0.70 1.55 3.60 84.0 149 886
+6m 0.50 0.75 1.60 3.75 85.0 141 875
+12m 0.50 0.75 1.95 4.05 82.0 155 909
CHF 06-Aug 0.25 0.17 0.63 1.91 138.0 104.6 540.1
+3m 0.25 0.15 0.60 2.00 130 104 572
+6m 0.50 0.50 0.95 2.15 128 107 581
+12m 1.00 1.00 1.60 2.50 135 106 552
DKK 06-Aug 1.05 1.15 1.74 3.04 745.1 565.0 -
+3m 1.05 1.10 1.60 3.20 744 595 -
+6m 1.05 1.10 1.65 3.25 744 620 -
+12m 1.05 1.35 1.95 3.50 745 587 -
SEK 06-Aug 0.50 0.95 1.80 2.94 938.1 711.3 79.4
+3m 0.50 0.80 2.00 2.70 940 752 79.1
+6m 1.00 1.30 2.30 2.90 920 767 80.9
+12m 1.50 1.90 3.00 3.45 920 724 81.0
NOK 06-Aug 2.00 2.68 3.14 3.99 787.4 597.0 94.6
+3m 2.00 2.65 3.20 4.30 765 612 97.3
+6m 2.50 3.00 3.50 4.45 760 633 97.9
+12m 3.25 3.75 4.25 4.80 760 598 98.0

Equity markets
Price trend Price trend Regional recommen-
Risk
3 mth. 12 mth. dations
Regional
USA Low -5% to +5% 0% to +10% Underweight
Japan High -5% to +5% 0% to +10% Neutral
Emerging markets (USD) High -5% to +5% 0% to +10% Overweight
Pan-Europe (EUR) Low -5% to +5% 0% to +10% Neutral
Nordics
Sweden Average -5% to +5% 0% to +10% Neutral
Norway High -5% to +5% 0% to +10% Neutral
Denmark High -5% to +5% 0% to +10% Neutral

Commodities
2010 2011 Average
06-Aug Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2010 2011
NYMEX WTI 82 81 81 80 85 87 89 92 94 82 91
ICE Brent 81 79 81 79 84 86 88 91 93 81 90
Copper 7,399 7,274 7,072 7,200 7,500 8,000 8,400 8,600 8,700 7,261 8,425
Zinc 2,097 2,307 2,067 1,900 2,000 2,100 2,150 2,200 2,250 2,069 2,175
Nickel/1000 22 20 23 21 22 22 23 23 24 21 23
Steel 503 464 491 460 475 500 510 530 550 473 523
Aluminium 2,200 2,199 2,131 2,100 2,100 2,150 2,200 2,300 2,400 2,132 2,263
Gold 1,194 1,110 1,194 1,200 1,150 1,100 1,050 1,000 1,000 1,164 1,038
Matif Mill Wheat 225 126 131 132 123 120 127 127 127 128 125
CBOT Wheat 812 518 490 470 450 475 500 500 500 482 494
CBOT Corn 398 389 379 375 410 420 430 440 450 388 435
CBOT Soybeans 1,060 969 932 975 990 1,000 1,010 1,020 1,030 967 1,015
*Interest rate forecasts will be revised mid August

Source: Danske Markets

15 | 06 August 2010
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Weekly Focus

Calendar
Key Data and Events in Week 32

Monday, August 9, 2010 Period Danske Bank Consensus Previous

1:50 JPY Current account s.a. JPY bn Jun 1447.0 904.8
1:50 JPY Money supply M2+CD y/y Jul 2.9% 2.9%
1:50 JPY Bank Lending y/y Jul -1.9%
7:00 JPY Eco Watchers Survey: Current Index Jul 48.0 47.5
8:00 DEM Trade balance EUR bn Jun 13.0 12.0 9.7
9:30 DKK Current account DKK bn Jun 6.0 6.7
9:30 DKK Trade Balance DKK bn Jun 7.5

Tuesday, August 10, 2010 Period Danske Bank Consensus Previous

- CNY Trade balance USD bn Jul 19.60 20.02
- JPY BoJ Monetary Policy Announcement % 0.10 0.10 0.10
- JPY Cabinet Office Monthly Economic Report
1:01 GBP BRC Retail Sales Monitor Jul
1:01 GBP RICS House Price Balance Index Jul 9%
8:00 DEM Inflation (HICP) m/m|y/y Jul 0.3%|1.2% 0.3%|1.2% 0.3%|1.2%
8:45 FRF Manufacturing production m/m|y/y Jun 0.5%|7.5%
8:45 FRF Industrial production m/m|y/y Jun -0.2%|7.3% 1.7%|8.2%
9:30 DKK CPI m/m|y/y Jul -0.4%|1.9% -0.2%|1.7%
9:30 DKK Industrial production m/m Jun 4.4%
10:00 NOK Consumer prices m/m|y/y Jul -0.1%|1.9%
10:00 NOK Core inflation(CPI-ATE) m/m|y/y Jul -0.4%|1.4% 0.2%|1.3%
10:00 NOK Producer prices, incl. Oil m/m|y/y Jul 2.3%|11.4%
10:30 GBP Trade balance GBP mln. Jun -3817
11:15 EUR ECB Announces Allotment in 7-Day Refinancing Tender EUR bn 154.8
11:15 EUR ECB Announces Allotment in 1-Month Refinancing Tender EUR bn 49.4
14:30 USD Unit labour cost q/q 2nd quarter 0.4% 1.6% -1.3%
20:15 USD FOMC meeting % 0.25 0.25

Wednesday, August 11, 2010 Period Danske Bank Consensus Previous

- OTH Earnings: Nestle SA, Cisco Systems Inc
1:01 GBP Nationwide Consumer Confidence Jul 63
1:50 JPY Machine orders m/m|y/y Jun 5.4%|1.5% -9.1%|4.3%
1:50 JPY Domestic CGPI m/m|y/y Jul 0.0%|0.0% -0.4%|0.5%
4:00 CNY PPI y/y Jul 6.0% 6.4%
4:00 CNY CPI y/y Jul 3.3% 2.9%
4:00 CNY Retail sales value y/y Jul 18.5% 18.3%
4:00 CNY Industrial production y/y Jul 13.4% 13.7%
4:00 CNY Fixed assets investments y/y Jul 25.3% 25.5%
10:30 GBP Jobless Claims Change 1,000 Jul -18.0 -20.8
10:30 GBP Unemployment rate % Jun 7.8 7.8
11:30 GBP Bank of England Quarterly Inflation Report
13:00 USD MBA mortgage applications % 1.3
14:00 NOK Norwegian Deposit Rates % 2.0 2.0 2.0
14:30 USD Trade balance USD bn Jun -42.2 -42.3
20:00 USD Budget statement USD bn Jul -165.0 -180.7
Source: Danske Markets

16 | 06 August 2010
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Weekly Focus

Calendar - continued

Thursday, August 12, 2010 Period Danske Bank Consensus Previous

3:30 AUD Unemployment rate % Jul 5.1 5.1
6:30 JPY Industrial production, final m/m|y/y Jun -1.5%|17.0%
7:00 JPY Consumer sentiment survey Index Jul 43.9 43.6
9:00 ESP Inflation (HICP) m/m|y/y Jul 0.2%|1.9%
9:30 SEK CPI change m/m|y/y Jul 0.0%|0.9%
9:30 SEK SW CPI - CPIF m/m|y/y Jul 0.0%|1.9%
10:00 ITL Inflation (HICP) m/m|y/y Jun -0.9%|1.8% -0.9%|1.8%
10:00 SEK Statistics Sweden, Unemployment % Jul 4.8
10:00 NOK Retail sales, s.a. m/m|y/y Jun 0.6% -0.1%|-3.0%
11:00 EUR Industrial production m/m|y/y Jun 0.6%|9.3% 1.0%|9.6%
14:30 USD Initial jobless claims 1000 479
14:30 USD Import prices m/m|y/y Jul 0.4%|5.3% -1.3%|4.5%

Friday, August 13, 2010 Period Danske Bank Consensus Previous

8:00 DEM GDP, s.a. q/q|y/y 2nd quarter 1.3%|2.4% 1.3%|2.4%
8:45 FRF Inflation (HICP) m/m|y/y Jul -0.4%|1.8% 0.0%|1.7%
8:45 FRF GDP, s.a. q/q|y/y 2nd quarter 0.6%|1.6% 0.4%|1.4% 0.1%|1.2%
9:00 ESP GDP, s.a. q/q|y/y 2nd quarter 0.2%|1.5% 0.1%|-1.3%
9:30 SEK Industrial production m/m|y/y Jun 2.3%|12.4%
9:30 SEK Industrial orders m/m|y/y Jun 2.1%|20.4%
11:00 EUR Trade Balance, s.a. EUR bn Jun -3.0
11:00 EUR GDP, s.a. q/q|y/y 2nd quarter 0.7%|1.4% 0.7%|1.4% 0.2%|0.6%
14:30 USD CPI m/m|y/y Jul 0.2%|1.2% 0.2%|1.2% -0.1%|1.1%
14:30 USD CPI ex. food & energy m/m|y/y Jul 0.0%|0.9% 0.1%|0.9% 0.2%|0.9%
14:30 USD Retail sales less autos m/m Jul 0.3% 0.3% -0.1
14:30 USD Retail sales m/m Jul 0.5% 0.4% -0.5%
14:30 USD Retail sales less autos & gas m/m Jul 0.2% 0.3% 0.1%
15:55 USD University of Michigan Confidence Index Aug 69.0 69.8 67.8

During the week Period Danske Bank Consensus Previous

Tue 10 - 13 CNY Money supply M2 y/y Jul 18.5% 18.5%
Source: Danske Markets

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Weekly Focus

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