Daily Comment RR 05Jul11

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1

Daily Comment Raiffeisen RESEARCH

5 July 2011

Established markets: In the absence of any important data releases yesterday , the mar-kets were once again driven by the news flow on the planned se-cond bailout package for Greece . At the centre of attention was astatement issued by rating agency S&P on the participation of theprivate sector put forward by French banks. S&P warned that theFrench debt rollover plan (see our latest weekly market outlook for

details) may still warrant a selective default rating . As the Frenchplan had recently been considered a model for other EUR coun-tries, the markets reacted negatively to the agency‘s stance, withthe risk premiums on peripheral sovereign debt increasing slightlyonce again following the powerful tightening of spreads of recentdays.On the data side, today ‘s release of the results of the Services Purchasing Managers Index (PMI) survey will be interesting forthe EUR peripheral states. We are expecting a rise in the PMI inItaly but declines in Ireland and Spain. Factory Orders are on theagenda in the USA , which are forecast to have improved in Mayover the previous month.

Equity markets: The new week started off with Independence Day in the UnitedStates. Accordingly, the US equity markets remained closed andno new US economic data was published. As a result, there waslittle going on in the early hours of the morning in the Japanese equity market , either. Only a newspaper report stating that theTokyo Securities Exchange might be merging with its counter-part in Osaka caused a sensation, sending the stock price of theOsaka Securities Exchange up by around eight percent at onepoint. Otherwise, hardly any trends were discernible. The mainEuropean bourses will presumably also start the new day on afairly muted note. Trading is not likely to pick up until the after-

noon, when the US bourses open for the week and the latest ISMServices Index figures are published in the United States.

Hourly Q/SPc1 07:0030.06.2011- 04:0005.07.2011(CHG)

1.307,221.307,22

Cndl;Q/SPc1;LastTrade

01:0005.07.2011;1.332,50;1.333,40;1.332,50;1.333,10

Cndl;Q/SPc1;LastTrade

01:0005.07.2011;1.332,50;1.333,40;1.332,50;1.333,10

SMA;Q/SPc1;LastTrade(Open);13;

01:0005.07.2011;1.332,79

SMA;Q/SPc1;LastTrade(Open);13;

01:0005.07.2011;1.332,79

Price

USD

.12

1.308

1.311

1.314

1.317

1.320

1.323

1.326

1.329

1.332

1.335

1.338

Price

USD

.12

1.308

1.311

1.314

1.317

1.320

1.323

1.326

1.329

1.332

1.335

1.338

0 8:0 0 09: 00 1 1:0 0 1 3:0 0 15 :0 0 16 :0 0 1 8: 00 2 0:0 0 22 :0 0 00 :0 0 0 2: 00 0 4: 00 06 :0 0 08 :0 0 09:0 0 1 1: 00 1 3: 00 15 :0 0 18 :0 0 2 0: 00 2 2:0 000 :0 0 02 :0 0 0 4: 00 0 6:0 0 08 :0 0

30 Juni 2011 01 Juli 2011 03 Juli 2011

Chart of the day

Source: Thomson Reuters, Raiffeisen RESEARCH

Important indicators today RBI consensus last

USA 16:00 Factory orders, mom May 0.8% 1.0% -1.2%

Europe 08:00 IR: PMI Services Jun. 49.0 0.0% 50.5

09:15 SP: PMI Services Jun. 50.0 0.0% 0.0%

09:45 IT: PMI Services Jun. 51.0 49.4 50.1

11:00 EUR: Retail sales, mom May n.a. -1.0% 0.9%

n.a. HU: Budget balance, HUF Mrd. ytd Jun. n.a. n.v. -724

Emerging Markets 11:30 SA: Business Confidence Jun. n.a. n.v. 85.8

15:00 BZ: Capacity Utilization May n.a. 82.10% 82.00%

15:00 MX: Consumer Confidence Jun. n.a. 90.4 89.3

Source: Bloomberg, Raiffeisen RESEARCH

Market overview cur. 1T Δ 52W H 52W L Ytd Δ

Interest rates, yields

3M Euribor EUR 1.56% 0.7 BP 1.1% 0.6% 55.7 BP

3M Libor USD 0.25% 0.0 BP 0.6% 0.2% -5.7 BP

Bund Future EUR 125.48 0.0% 134.8 119.9 0.1%

US T Note Future 122.31 0.3% 125.0 115.1 3.5%

Currencies

EUR/USD 1.446 0.5% 1.49 1.25 -8.1%

EUR/JPY 117.260 -0.2% 123.3 105.4 7.5%

EUR/CHF 1.228 -0.4% 1.4 1.2 -1.9%

EUR/CZK 24.271 0.0% 25.9 23.9 -3.1%

EUR/HUF 263.930 0.1% 292.1 262.6 -5.6%

EUR/PLN 3.938 0.0% 4.15 3.83 -0.7%

Equity markets

S&P 500 1340 1.4% 1371 1016 6.5%

Dow Jones I. A. 12583 1.4% 12876 9614 8.7%

Nasdaq Comp. 2816 1.5% 2888 2078 6.2%

DJ EuroStoxx 50 2870 -0.2% 3077 2507 2.8%

DAX 7443 0.3% 7600 5809 7.6%

ATX 2803 -0.3% 3013 2224 -3.5%

Nikkei 225 9972 0.1% 10892 8228 -2.5%

Emerging Markets

Hang Seng (China) 12855 -0.1% 14219 11142 1.3%

Sensex (India) 18731 -0.4% 21109 17296 -8.7%

Bovespa (Brazil) 63891 0.8% 73103 60489 -7.8%

JALSH (South Africa) 32078 0.5% 33335 26168 -0.1%

Commodities

Brent Oil USD/bbl 111 -0.1% 126 78 16.9%

Gold USD/oz 1493 -0.2% 1578 1157 5.7%

Credit markets

iTRAXX Europe 92 1 BP 125 94 -1 BP

ITRAXX Crossover 360 2 BP 563 352 -50 BP

iTRAXX Fin. Senior 148 3 BP 210 107 -23 BP5J CDS Greece. n.a. n.a. 987 625 -973 BP

5J CDS Spain 202 2 BP 301 121 -75 BP

5J CDS Portugal 765 9 BP 834 184 343 BP

Prices as of 5 July 11, 8:12 a.m. (CET)Source: Bloomberg

S&P Future Last: 1,330.30 BuyTarget: 1,342.5 – 1,348.02 Bullish Flag and rallyexpected, buy 1,337, stop 1,330 -> 1,320 – 1,313

uly 5th, 2011 07:54 CET



2

Daily Comment

Credit markets: The spread of the iTRAXX Main Index widened mar-ginally (+1bp) at the start of the week. Issues on theprimary market include ING Bank ’s covered bond forEUR 300 million (coupon: 3.375%), Vivendi ’s dual-tranche paper (EUR 1 billion, 4-yr, coupon 3.5% andEUR 750 million, 10yr, coupon 4.75%) and a bondfrom Amadeus for EUR 750 million (5yr, coupon4.875%). According to the CEO of the Italian bank,UniCredit SpA will participate in the rollover of Greekdebts. The government of the Ukraine has issued astatement regarding the timing of the upcoming pri-vatisation plans for its energy sector. The first assetsshould go up for sale as early as August. DTEK isamong those interested in some of these propertiesand we think might take on new debt to purchasethem. In our view, the company’s credit profile can

well handle such acquisitions. We continue to ratethe 2015 USD bond of DTEK a “buy”.

Emerging Markets: There is now once again a more upbeat view of theemerging equities markets. Currencies are also pro-viding a boost: the odds are on a further increasein the ZAR and the BRL. The yuan climbed to newheights against the USD after the central bank set afirmer average exchange rate; however, the marketremains sceptical about a stronger revaluation.

CEE: The Fitch rating agency has upgraded Romania’s credit rating from BB+ to BBB-. This means that thecountry’s rating is once again in the investmentgrade segment. The end of the recession, strong ex-port momentum, a declining current account deficitand progress made in consolidating the budget wereall contributory factors in this decision. The Roma-nian leu reacted positively and appreciated by 0.6%immediately after announcement of the upgrade. Wesee further upside potential for the currency due tothe poor performance last month. Turkish government bonds profited from the good inflation figuresfor June. The yield on the 2-year benchmark bonddropped by 15 bp to 9% p.a. The CPI decreased by1.4% compared to the previous month (by more thantwice as much as expected!) following an unexpec-tedly strong surge of 2.4% in May. However, we stillsee risks of inflation and project a slight increase ingovernment bonds yields in Q3.

Market overview current 1T Δ 52W H 52W L Ytd Δ

Other interest rates EUR

Eonia 0.82% -9.4 BP 0.7% 0.3% -0.2 BP





2Y Swap EUR 2.23% 1.2 BP 2.5% 1.1% 67.7 BP

3Y Swap EUR 2.45% 2.0 BP 2.8% 1.4% 56.1 BP

5Y Swap EUR 2.82% -0.8 BP 3.2% 1.6% 32.5 BP

10Y Swap EUR 3.39% -1.0 BP 3.8% 2.3% 2.3 BP

Other currencies

EUR/GBP 0.903 -0.1% 0.9 0.8 5.0%

EUR/HRK 7.397 0.0% 7.5 7.2 0.2%

EUR/RON 4.188 -0.2% 4.3 4.1 -2.2%

EUR/SEK 9.071 -0.3% 9.6 8.7 0.9%

EUR/RUB 40.300 -0.3% 43.9 38.6 -1.3%

EUR/UAH 11.560 -0.6% 11.9 9.9 9.2%

EUR/TRY 2.342 -0.3% 2.4 1.9 11.8%

EUR/BRL 2.258 -0.1% 2.4 2.2 1.6%

EUR/CNY 9.356 -0.4% 9.7 8.5 5.7%

EUR/ZAR 9.746 -0.3% 10.0 8.7 8.9%

Bond market

2Y Bund EUR 1.66% -0.8 BP 1.6% 0.5% 79.4 BP

5Y Bund EUR 2.28% -1.6 BP 2.7% 1.4% 44.0 BP

10Y Bund EUR 3.00% -1.7 BP 3.5% 2.5% 4.0 BP

2Y US Treasury 0.45% -1.8 BP 1.3% 0.7% -13.9 BP



Interest rates CEE

3M Pribor 0.8 0.0 BP 1.8% 0.8% -7 BP

3M Wibor 4.6 0.0 BP 4.4% 3.7% 75 BP

3M Bubor 6.1 0.0 BP 9.7% 5.2% 25 BP10Y Czech Rep. 3.9 -0.2 BP 5.2% 3.6% 3 BP

10Y Poland 5.7 -1.5 BP 6.4% 5.5% -31 BP

10Y Hungary 7.3 0.0 BP 10.0% 6.4% -64 BP

Equity markets CEE

Turkey (ISE Nat. 100) 64187 0.0% 71777 55488 -2.8%

Croatia (CROBEX) 2231 -0.3% 2338 1773 5.7%

Poland (WIG20) 2804 -0.3% 2942 2284 2.2%

Romania (BET) 5532 0.8% 6099 4694 5.0%

Russia (MICEX) 1706 0.0% 1865 1282 1.1%

Serbia (BELEX15) 740 -1.2% 829 600 13.5%

Czech Rep. (PX) 1232 -0.3% 1278 1096 0.6%

Hungary (BUX) 22633 -0.9% 24531 20147 6.1%

Commodities

WTI Oil USD/bbl 94.8 -0.1% 115.5 76.6 0.6%

Fuel oil USD/mt 917.0 0.1% 1064.5 607.0 20.3%Diesel USD/mt 945.0 0.6% n.a. n.a. 19.6%

CO2 EUA Fut. EUR/mt 13.1 1.0% 15.8 13.2 14.5%

Silver USD/oz 33.9 -0.6% 49.8 17.3 10.4%

Platinum USD/oz 1714.8 -0.6% 1886.5 1486.0 -1.3%

Palladium USD/oz 756.3 -0.3% 862.3 426.5 -4.7%

Steel USD/mt 589.0 0.7% 576.0 450.0 7.5%

Aluminium USD/mt 2504.0 -0.3% 2803.0 1931.0 1.4%

Copper USD/mt 9435.3 -0.2% 10190.0 6425.0 -1.7%

Prices as of 5 July 11, 8:12 a.m. (CET)Source: Bloomberg



This report was completed on 4 Julye 2011

Editor

Raiffeisen RESEARCH GmbHA-1030 Vienna, Am Stadtpark 9Tel: +43 1 717 07-1521

Head: Peter Brezinschek (1517)

Research Sales:

Werner Weingraber (5975)

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Stocks: Helge Rechberger (Head, 1533), Aaron Alber (1513), Christian Hinterwallner (1633), Jörn Lange (5934),

Hannes Loacker (1885), Richard Malzer (5935), Johannes Mattner (1463), Christine Nowak (1625),Leopold Salcher (2176), Andreas Schiller (1358), Connie Schümann (2178), Magdalena Wasowicz (2169)

Quant Research/Emerging Markets: Veronika Lammer (Head, 3741), Mario Annau (1355), Lydia Kranner (1609), Nina Kukic (1635),Albert Moik (1593), Manuel Schuster (1529)

Technical analysis: Stefan Memmer (1421), Robert Schittler (1537)

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Daily Comment Acknowledgements

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Daily Comment RR 05Jul11