Investment Research — General Market Conditions

5 July 2010

Danske Daily
Key news
Market movers today: Today
US stock markets closed lower on Friday finishing another bad week. Bond yields
slightly higher. Quiet day ahead with US markets [Tex
closed and no real market movers
US markets closed today due to Independence Day yesterday.
In Poland Komorowski of the ruling Civic Platform party has been elected as the
country’s new president. Market overview
07:30 1 day +/-,%

S&P500 (clo se) 1022.6  -0.47

Markets Overnight S&P500 fut (chng fro m clo se)
Nikkei
1015.7
9252.2


0.14
0.53
Hang Seng 19859.9  -0.23
Equity markets ended 0.5% lower on Friday finishing another bad week with a loss of
5%. The reaction to the US employment report was fairly neutral but markets slipped 17:00 07:30 +/-, bp

during Friday evening. Markets in Asia are a bit mixed with Chinese equities down 2% US 2y gov 0.63 0.63  0.0
US 10y gov 2.96 2.98  1.6
while the Nikkei and the S&P500 future are up slightly.
iTraxx Europe (IG) 122 128  5.7
US 10-year bond yields finished a couple of basis points higher at 2.98% on Friday on iTraxx Xover (Non IG) 482 570  88

the back of the US non-farm payrolls – see also Flash Comment US – a mixed labour +/-, %
EUR/USD 1.259 1.254  -0.41
market report. This comes after a long period of disappointing data pushing yields lower USD/JPY 87.790 87.910  0.14
but without further fuel to this trend the market consolidated a bit on Friday. In the money EUR/CHF 1.34 1.33  -0.38
EUR/GBP 0.830 0.826  -0.38
market, Euribor rates continued to move higher on Friday with three-month euribor EUR/SEK 9.584 9.596  0.12
EUR/NOK 8.10 8.09  -0.08
reaching 0.79%.
USD
In FX markets EUR/USD moved to 1.26 following the US job report but has Oil Brent, USD 72.1 72.1  0.06
Gold, USD 1205.9 1213.3  0.61
subsequently moved back down to around 125.50. EUR/SEK has moved higher in Asian
Note:
trading to 9.62 and EUR/NOK also continues to see upward pressure. DKK weakened * The iTraxx Europe Index shows the spread
further against the EUR on Friday to 7.452 as euro rates climbed higher due to money development for the most liquid investment grade CDS
contracts in the euro credit market.
market tensions.
**The iTraxx Europe Crossover shows the spread
In the Polish presidential election Bronislaw Komorowski won over Jaroslaw development of the most liquid non-investment grade
CDS contracts in the euro credit market.
Kaczynski, the twin brother of Lech Kaczynski who died in a plane crash in April.
Source: Bloomberg
Komorowski of the ruling Civic Platform party won 53.1% of the vote according to exit
polls. The Civic Platform party is seen as business friendly and wants to push through an
agenda of public spending cuts and further privatisation of remaining state enterprises –
see WSJ.

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

www.danskeresearch.com
Danske Daily

Global Daily
Focus today: Very quiet day today as the US is closed for Independence Day. Final Euro
Euro consumers still not consuming
service PMI and Euroland retail sales are hardly going to rock the markets. Risk appetite
105 Index 105
will continue to be the name of the game. The main event this week will be the ECB Index
104 104
meeting on Thursday. In the US the ISM non-manufacturing index on Tuesday and 103 103
jobless claims on Thursday are the only data of interest this week. 102 102
101 101
Fixed income markets: Despite a mixed US employment report and further decline in Euroland retail sales
100 100

equities, US bond yields closed higher on Friday. This may suggest that the downward 99 99
05 06 07 08 09 10
trend in yields is running out of steam somewhat in the short term. In a quiet week
datawise we might see some further consolidation with a slight upward drift in yields Source: Reuters Ecowin

during the week. PIIGS countries managed to outperform on Friday with especially
Portugal rallying. The ECB meeting on Thursday will be the main event for fixed income
US S&P500 future
markets this week.
1087 1087
FX markets: The US is closed today to observe Independence Day. Hence, we expect a
1067 1067
quiet session in the global FX market. Today, we published a short GBP/USD
1047 1047
recommendation based on the technical picture. See more in Weekly Technical Update.
1027 1027
EUR/USD moved significantly higher last week on the back of weak US data and falling
1007 1007
US rates and is currently trading above 125.00. In Weekly Focus on Friday in the FX Thu Fri Tue Wed Thu Mon
section we took a closer look at the reasons behind the move higher in EUR/USD. Source: Danske Markets

Scandi Daily US 10y gov yield

There are no key events in Scandi today.
3.13 3.13

3.03 3.03

2.93 2.93
Key figures and events
2.83 2.83
Monday, July 5, 2010 Period Danske Bank Consensus Previous
Thu Fri Tue Wed Thu Mon
- USD Independence Day - Market closed
9:15 CHF Retail sales (real) y/y May 1.3%
9:45 ITL PMI Services, Final Index Jun 53,6 53.5 53.7 Source: Danske Markets
9:50 FRF PMI Services, Final Index Jun 61.6 61.6 61.6
9:55 DEM PMI Services, Final Index Jun 54.6 54.6 54.6
10:00 EUR PMI Services, Final Jun 55.4 55.4 55.4
10:00 EUR PMI Composite, Final Index Jun 56.0 56.0 56.0
10:30 GBP PMI Services Jun 55.0 55.4 Global FX
11:00 EUR Retail sales m/m|y/y May 0.3%|-0.5% 0.5%|-0.2% -1.5%|-1.8%
EUR/USD (LHS) USD/JPY (RHS)

89.7
1.255
88.8
1.235
87.9

1.215 87
Thu Fri Tue Wed Thu Mon

Source: Danske Markets

Scandi FX
EUR/SEK (LHS) EUR/NOK (RHS)
8.12
9.64
8.06
9.59
8.00
9.54 7.94
9.49 7.88
Thu Fri Tue Wed Thu Mon

Source: Danske Markets

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Today’s market data: 05 July 2010

STOCKS
S&P500 Intraday, % Eurostoxx Intraday, %
Clo se +/-
1.80 1.80 3.40 3.4 DJSTOXX50 2297  -0.3%
Max 2.3 Max 3.9 OM XC20 390  1.7%
1.10 Min -0.3 1.10 2.70 Min 1.3 2.7 OM XS30 983  0.2%
0.7 0.7 OSE B X 326  0.0%
0.40 0.40 2.00 2

Clo se +/-
-0.30 -0.30 1.30 1.3 DOW JONES 9686  -0.5%
15 16 17 18 19 20 21 09 10 11 12 13 14 15 16 17 18 NA SDA Q 2092  -0.5%
Grey line indicates closing of Danish markets
Grey line indicates opening of US markets
1mo nth  -4.0% 1mo nth  -3.3% S&P 500 1023  -0.5%
Year-to -date  -8.3% Year-to -date  -11.2% NIKKEI (07:30) 9252  -0.3%

FX & COMMODITIES
O il,
EUR/USD Intraday E UR 17:00 07:30 +/- G o ld, $ B re nt , $
USD 125.93 125.41  -0.52 07:30 1213.25 72.09
124.9 124.9 JP Y 110.56 110.24  -0.32 1day  1.65  0.44
Max ## GB P 82.96 82.64  -0.32 1mo nth  -6.65  0.00
123.9 123.9
Min ## NOK 809.77 809.16  -0.61 Year-t-date  116.30  -5.84

122.9
1.0 122.9
SEK 958.42 959.55  1.13
DKK 745.11 745.17  0.06 CRB C R B , R aw
121.9 121.9 P LN 415.07 414.32  -0.75 1M f ut ure Indus t ria ls
07 10 13 16 19 22 01 04 US D 17:00 07:30 +/- 07:30 254.48 473.39
JP Y 87.79 87.91  0.12 1day  -1.73  -0.74
1mo nth  6.18 GB P 151.81 151.75  -0.06 1mo nth  5.54  -2.51
Year-to -date  -17.80 CHF 106.41 106.44  0.03 Year-t-date  -28.90  -10.10
* 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
0.66 3.00
USD2Y USD10Y USD 0.25 0.53 28 USD 10Y 2.96 2.98  2
0.64 Max 0.7 Max 3.0 EUR 1.00 0.79 -21 USD 30Y 3.92 3.94  2
2.97
Min 0.6 Min 2.9 GB P 0.50 0.73 23 JP Y 10Y 1.10 1.11  1
0.62
0 0 DKK 1.05 1.13 8
2.94 SEK 0.25 0.83 58 07:30(-1)* 17:00 +/-, bp
0.60
NOK 2.00 2.84 84 DEM 10Y 2.58 2.59  0
0.58 2.91 P LN 3.50 3.75 25 DKK 10Y 2.67 2.69  2
07 10 13 16 19 22 01 04 SEK 10Y 2.65 2.63  -2
USD2Y (lhs) USD10Y (rhs) NOK 10Y 3.55 3.55  0
P LN 10Y 5.94 5.91  -4
* 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 3.33 4.0 4.0
3.0 0.2
3.5 2.2
3.0 3.0 2.5 0.1
3.0 1.7 0.0
2.0 2.0 2.5 2.0
1.44 1.2 -0.1
0.96 2.0
1.0
0.77
1.0 1.5
## M ax 2.690 0.7 1.5 ## M ax # # # -0.2
0.39 0.40 -0.3
0.000.04 1.0 ## M in -0.790 0.2 1.0 ## M in # # #
0.0 0.0 -0.4
0.5 -0.3 0.5 -0.5
USD JPYGBPFRF ITL DKKSEKNOKPLN 0.0 -0.8
-1.0 -1.0 0.0 -0.6
USD2Y USD5Y USD10Y
DEM2Y DEM5YR DEM10Y
-2.0 -1.47 -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 Credit spreads S wa p S pre a d, bp**

160 900 17:00 07:30 +/-

07:30 1day 1mo nth 140 800 USD 10Y 8 10  2
120 700
Euro pe (IG) 128  -3  -8 JP Y 10Y 8 8  0
100 600
HiVo l 186  -10  -18 500
80
Xo ver (N-IG) 570  -17  -55 400 07:30(-1)* 17:00 +/-
60 300
40 EUR 10Y 33 31  -1
200
20 100 DKK 10Y 37 36  -1
Finan. Sr. 153  -7  -35 0 0 SEK 10Y 32 32  0
Finan. Sub. 235  -8  -49 Jul Aug Oct Nov Jan Feb Apr May Jun NOK 10Y 57 60  3
No n-finan. 235  -8  -49 iTraxx Europe (IG) (left axis)
iTraxx Xover (Non IG) (right axis) * As of closing previous trading day
* Ask price ** Ask price

So urce: B lo o mberg 7:30(-1) o g 17:00 refers to the previo us (trade) day

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First date of publication

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