Investment Research General Market Conditions 20 August 2013 Market movers today Again today we have a very light calendar with only a few minor releases. Early this morning Germany will release producer prices and at noon Ireland is scheduled to release property prices for July. In Ireland property prices have increased in the past three months and appear to have turned around. In Germany the campaign ahead of the general election on 22 September moves up a gear today. Chancellor Merkel is scheduled to speak at two campaign rallies and Finance Minister Schäuble is scheduled to speak at no less than four events. Norwegian Q2 GDP likely to confirm no more rate cuts from Norges Bank. For more on Scandi markets see page 2. Selected market news Focus is on emerging markets woes this morning as there is a very light calendar in Europe and US (see WSJ and FT). India takes centre stage after stock markets tumbled another 1.6% on Monday following a 4% decline on Friday and the rupee declined to a fresh low against the dollar. Other developing nations like Indonesia and Thailand have also seen their currencies weaken since the Fed first announced its plan to scale back asset purchases. Indonesia s stock market declined 5.6% on Monday after reporting a sharp widening of the current account deficit in Q2 and Thailand posted a second quarter of negative growth. This morning the negative sentiment has continued in Asian trading and most equity indices are down. That said, we do not expect a repeat of the Asian crisis. Although the mentioned countries run current account deficits, they are fundamentally sounder than back in 1997-98. Their external balances are much lower and nations have ample stocks of foreign currency reserves. Market overview Note: * The itraxx Europe Index shows the spread development for the most liquid investment grade CDS contracts in the euro credit market. **The itraxx Europe Crossover show the spread development of the most liquid non-investment grade CDS contracts in the euro credit market. ***The Markit CDX North America Investment Grade Index shows the spread development for the most liquid investment grade CDS contracts in the US credit market. Source: Bloomberg 07:30 1 day +/-,% S&P500 (close) 1646.1-9 S&P500 fut (chng from close) 1644.0-5 Nikkei 13586.7-1.25 Hang Seng 2213-1.48 17:00 07:30 +/-, bp US 2y gov 0.35 0.34-0.8 US 10y gov 2.86 2.84-2.1 itraxx Europe (IG) 103 103 0.4 itraxx Xover (Non IG) 425 427 1.7 +/-, % EUR/USD 1.335 1.335 1 USD/JPY 97.910 97.380-4 EUR/CHF 1.23 1.23-0.23 EUR/GBP 0.852 0.853 0.13 EUR/SEK 8.681 8.690 0.10 EUR/NOK 7.88 7.90 0.24 USD Oil Brent, USD 110.9 109.5-1.23 Gold, USD 1366.6 1363.5-0.23 In Australia AUD dropped, as minutes from the RBA meeting on 6 August showed that members agreed not to shut the door for further rate cuts nor signal an imminent intention to reduce rates further but stressed that the course of the exchange rate would be important. Senior Analyst Signe Roed-Frederiksen +45 45 12 82 29 sroe@danskebank.dk Important disclosures and certifications are contained from page 4 of this report.
Scandi markets today Norway. GDP-figures will be published at 10:00 CET. We expect that mainland-gdp grew around the trend rate of 0.75% q/q in Q2. The surprisingly strong figures for industrial production (up % q/q) actually present an upside risk to our forecast but we are unable to find this growth on the demand side. Either way, the figures will probably confirm that further rate cuts will not be needed in Norway. In addition, the overall GDP figures could very well have posted a significant gain in Q2 (around % q/q), due to the unexpected rise in oil production. Hence, market participants unfamiliar with the structure of the Norwegian economy could easily get carried away by the overall GDPfigures. US S&P500 future 1693 1693 1683 1683 1673 1673 1663 1663 1653 1653 1643 1643 Fixed Income markets A thin news calendar today but there will be good issuance activity of government bonds out of Scandinavia. At 10:30 CET the Danish Debt Management Office (Statsgældskontoret) will hold a tap auction of DGB % Nov. 2016 and the DGB % Nov. 2023 (these are the seventh and 12th taps of these bonds this year amounts are as usual unknown). Furthermore, at 11:00 CET Norway will hold its 14th tap of the NGB 4.5% May 2019 for an amount of NOK3bn. We expect both auctions to be met with good investor interest as liquidity is beginning to pick up in the thin summer markets. US 10y gov yield 2.90 2.9 2.80 2.8 2.70 2.7 2.60 2.6 0 FX markets The continued sell-off on the bond market is feeding through to the FX markets and not least the EM currencies. QE tapering has especially hurt the current account deficit currencies and with risk assets lower, IDR, NZD, INR, KRW and AUD lost in yesterday's trading. The currencies that attracted carry-type inflows during recent years rich global liquidity environment have almost all seen corrections in recent months but even as valuations become less stretched, the end of fast money printing in the developed economies does have the potential to trigger further depreciations. Global FX EUR/USD (LHS) USD/JPY (RHS) 98.4 1.34 97.6 1.33 96.8 1.32 96 Key figures and events Tuesday, August 20, 2013 Period Danske Bank Consensus Previous 9:30 SEK Capacity utilization, industry % 2nd quarter 84.6% 10:00 NOK GDP (total) q/q 2nd quarter % -0.2% 10:00 NOK GDP (mainland) q/q 2nd quarter 0.7% 0.7% 0.7% Scandi FX EUR/SEK (LHS) 8.74 8.70 EUR/NOK (RHS) 7.93 7.88 Source: Bloomberg, Danske Bank Markets 8.66 7.83 8.62 Fri Mon Wed Thu Fri 7.78 2 20 August 2013
Today s market data: 20 August 2013 0.40 0-0.40 S&P500 Intraday, % STOCKS DJSTOXX50 Max Max 0.4 OM XC20 570 Min -0.8 0-0.30 Min -1.1-0.3 OM XS30 1251 0.4 0.4 OSE BX 504 15 16 17 18 19 20 21 Grey line indicates closing of Danish markets DOW JONES NASDAQ 1 month -2.7% 1 month 0.4% S&P500 1646 2721-0.6% Year-to-date 15.4% Year-to-date 5.6% NIKKEI (07:30) 13587-0.6% FX & COMMODITIES EUR 17:00 07:30 +/- USD 133.50 133.51 1 07:30 133.6 133.6 JPY 130.70 131-0.69 1 day -2.47-0.37 Max ## GBP 85.20 85.31 0.11 1 month 67.41 1.46 133.4 Min ## 133.4 NOK 788.31 790.20 1.89 Year-t-date -311.84-8 0.2 SEK 868.07 868.97 0.90 133.2 133.2 DKK 745.80 745.83 3 CRB C R B, R aw PLN 424.90 425.25 0.35 JPY 97.91 97.38-3 1 day 8 1 month 1.65 GBP 156.68 156.49-0.19 1 month 2.14 Year-to-date 8 CHF 92.49 92.27-0.22 Year-t-date -1.94 YIELDS & INTEREST RATES Go ld, $ 1M future USD-Yields Intraday Spread, 0.37 P o licy R ate 3M bp 17:00 07:30 +/-, bp 2.91 USD2Y USD10Y USD 0.25 0.26 1 USD 10Y 2.86 2.84-2 0.36Max 0.4 Max 2.9 EUR 0 0.23-27 USD 30Y 3.87 3.87 0 Min 0.3 Min 2.8 2.88 GBP 0 1 1 JPY 10Y 0.77 0.76-1 0.35 0.34 0 0 2.85 DKK SEK 0.20 0 0.27 1.20 7 20 07:30(-1)* 17:00 +/-, bp NOK 0 1.73 23 DEM 10Y 1.91 1.90-1 0.33 07 10 13 16 19 22 01 04 USD2Y (lhs) EUR/USD Intraday 13 07 10 13 16 19 22 01 04 USD10Y (rhs) 0.40-0.40 13 2.82 0.10-0.70 Eurostoxx Intraday, % -1.10-1.1 09 10 11 12 13 14 15 16 17 18 Grey line indicates opening of US markets 0.1-0.7 07:30 Close Close 15011 3589 1363.51 297 PLN 0 2.60 10 DKK 10Y 6 5-2 % -0.3% 0.4% +/- +/- -% -0.4% -0.6% Oil, B rent, $ 109.53 Industrials 529.60 SEK 10Y 2.39 2.43 4 NOK 10Y 2.90 2.90 0 PLN 10Y 4.35 4.49 13 * As of closing previous trading day 0.21 9.31 0.94 - - 10Y Yield Spread to Germany 9 2.38-1.14 0.85 4 5 0.16 0 USDJPYGBPFRF ITL DKKSEKNOKPLN - - - - US Yield Curve ## M ax 00 ## M ax ### ## M in -2.980-0.8 ## M in ### - - - - - USD2Y USD5Y USD10Y D-t-D +/-, bp (right axis) 07:30 (left axis) 1 month ago (left axis) 1.8 1.6 1.4 1.2 0.6 0.4 0.2 German Yield Curve DEM2Y DEM5YR DEM10Y D-t-D +/-, bp (right axis) 07:30 (left axis) 1 month ago (left axis) -0.1-0.2-0.3-0.4 - -0.6-0.7-0.8-0.9 USD 17:00 07:30 +/- C redit spread, it raxx s. 11* Credit spreads Swap Spread, bp** 160 700 17:00 07:30 +/- 07:30 1 day 1 month 140 600 USD 10Y Europe (IG) 103 4 6 120 500 JPY 10Y 18 19 1 100 HiVol 157 3 3 400 80 Xover (N-IG) 427 16 34 300 07:30(-1)* 17:00 +/- 60 40 20 200 100 EUR 10Y DKK 10Y 0 32 30-2 Finan. Sr. 146 6 5 0 0 SEK 10Y 40 39-1 Finan. Sub. 221 7 6 Aug Oct Nov Jan Feb Apr May Jul Aug NOK 10Y 47 46-1 Non-finan. 22-6 -7 itraxx Europe (IG) (left axis) itraxx Xover (Non IG) (right axis) * Ask price ** Ask price * As of closing previous trading day 3 20 August 2013
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