Weekly Focus

8/6/2019 Weekly Focus

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Investment Research

Market Movers ahead

• The sovereign debt crisis in Europe should once again top the agenda in a week when

EU Finance Ministers are likely to approve the loan package for Portugal and devote a

lot of energy and attention to discussing the outlook for Greece.

• The US budget debate could resurface in the coming week, with the US set to exceed

its debt ceiling once again.

• US housing market data and the Philly Fed survey are due out in the week ahead.

Global Update

• Political statements from Finland and Germany indicate that EU members could be

ready to back another bailout package for Greece.

• Strong GDP numbers out of Germany and France support the outlook for another

ECB rate hike in July.

• US consumer spending disappointed slightly, but the setback is likely to be

temporary.

• Chinese GDP growth slows as inflation remains high.

• The Swedish economy surprised on the upside in spite of weak consumer spending,

while Danish exports performed below expectations. As expected, the Norwegian

central bank hiked rates in the past week.

Research picks of the week

• Greek debt restructuring difficult to avoid

• UK Research: Ten good reasons why the Bank of England will keep rates unchanged

in 2011

• Flash Comment – US: Still healthy retail sales

13 May 2011

Important disclosures and certifications are contained from page 20 of this report.

Editors

Allan von Mehren

+45 4512 8055

[email protected]

Steen Bocian

+45 45 12 85 31

[email protected]

Weekly FocusDebt crisis intensifying

Contents

Market movers ahead ............................................. 2

Global Update ................................................................... 5

Scandi Update .................................................................. 7

Latest research from Danske Bank .......... 9

Interest rates: Greece and Portugal inthe limelight..................................................................... 10

FX: New forecasts .................................................... 11

Commodities: Consolidation after thesell-off .................................................................................... 12

Credit: From Portugal to Greece ............... 13

Financial Views ........................................................... 14

Macroeconomic forecast ................................ 16

Financial forecast ..................................................... 17

Calendar ............................................................................. 18

Financial views

Read more on page 17

Source: Danske Bank

Greek government bondholders China�s import growth slowing sharply

Source: BIS, IMF, Danske Markets estimates Source: Reuters Ecowin, Danske Markets

Major indices

13-May 3M 12M

10yr EUR swap 3.46 3.70 3.90

EUR/USD 143 148 138

13-May 6M 12-24M

S&P500 1335 0-5% 15-20%

63

15

12

32

4726

20

7

106

Greek banks

Greek Central Bank

Other domestic

EU, IMF

ECB

German banks

French banks

Other banks

other foreign 04 05 06 07 08 09 10 11-40

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65 % 3m/3m

<< Imports, SA

Diffusion

Imports, NBS PMI >>

Purchase of inputs, HSBC PMI >>

http://danskeanalyse.danskebank.dk/link/GreekDebtRestructuring120511/$file/GreekDebtRestructuring_120511.pdf

http://danskeanalyse.danskebank.dk/link/UKResearch10goodreasons100511/$file/UKResearch_10goodreasons_100511.pdf


http://danskeanalyse.danskebank.dk/link/FlashCommentRetail120511/$file/FlashComment_Retail_120511.pdf

mailto:[email protected]

http://danskeanalyse.danskebank.dk/link/FlashCommentRetail120511/$file/FlashComment_Retail_120511.pdf



http://danskeanalyse.danskebank.dk/link/GreekDebtRestructuring120511/$file/GreekDebtRestructuring_120511.pdf



http://slidepdf.com/reader/full/weekly-focus 2/21

2 | 13 May 2011www.danskeresearch.com

Weekly Focus

Market movers ahead

Global

The main focus in the US will be data for Philadelphia Fed survey, which fell quite

strongly last month. Philly Fed also disappointed sharply last year but the weaknesswas never mirrored in ISM. We look for a slight rebound to 20 in May from 18.5 in

April as other indicators such as factory orders still point to decent growth in

manufacturing. The Empire survey is also released and will probably give back some

of the gains seen in recent months. Next week is also the big housing week with data

for housing starts, existing home sales, and the NAHB housing index. We look for a

slight rebound in home sales but overall data is likely to still paint a downbeat picture

of housing. FOMC minutes are also released but have lost some interest after the

introduction of press conferences. US jobless claims will continue to be watched

closely as recent data has pointed to some weakness. But it has also been distorted so

we need more data to judge the underlying trend.

Finally the US budget debate looks set to resurface next week as the US debt ceilingis likely to be surpassed early in the week. Payments can still be made until early

August, though, and hence politicians will probably take more time before striking a

deal to avoid a US default.

The Eurogroup meeting on Monday and the Ecofin meeting on Tuesday will receive

a lot of attention. Portugal is expected to get its loan package approved and options

for Greece will be discussed. We may get a first indication of a second loan package

for Greece. There is little doubt that Greece will eventually need more money and/or a

debt restructuring, see Greek debt restructuring difficult to avoid . The IMF’s

Dominique Strauss-Khan will participate in the Eurogroup meeting, raising expectations

of a bold announcement. Nevertheless, German Chancellor Angela Merkel has said

that she will wait for the conclusions of the IMF’s fourth review (to be finalised on 30May) before making any decisions, so expectations shouldn’t be too high.

Euro area HICP inflation is expected to be confirmed at 2.8% on Monday (there is a

small upside risk). Focus will be on whether core inflation continues the recent

upward trend. We think that it may climb from 1.3% to 1.5%. If so, there should be

little doubt that Trichet will say “strong vigilance” at next month’s ECB meeting and

hike rates in July. German ZEW expectations are projected to decline slightly while

current conditions remain at elevated levels.

UK: According to the Bank of England’s Inflation Report, CPI inflation is on track to

hit 5% y/y and remain higher than the bank’s 2% target in 2012. Our model confirms

this forecast. We expect CPI inflation to hit 4.9% in September, be above 4%

throughout the year, and stay above 3% until mid-2012 before dropping towards 2%

by spring 2013. Risk to the end-forecast is however skewed to the downside. Even

though a further rise in inflation clearly is uncomfortable for the BoE, we don’t think

it will lead to rate hikes as the economy remains too weak, see Ten good reasons why

the Bank of England will keep rates unchanged in 2011. UK rates could however rise

in panic in the meantime, before falling back as it becomes clear that the MPC will be

at a record-low for longer than generally perceived. Our projection is that data next

week will show CPI rose by 0.6% m/m in April, leaving the annual pace unchanged at

4.0% y/y. CPI usually rises 0.4% m/m in April.

ZEW expectations declines

Source: Reuters Ecowin

Philly Fed should bounce after last

month�s big decline


Euro area core inflation on the rise


00 02 04 06 08 10

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65Index Net bal<< USA ISM manufacturing

Philly Fed business confidence >>

http://danskeresearch.danskenet.net/link/GreekDebtRestructuring120511/$file/GreekDebtRestructuring_120511.pdf



http://danskeanalyse.danskebank.dk/abo/UKResearch10goodreasons100511/$file/UKResearch_10goodreasons_100511.pdf










Weekly Focus

The Bank of England Minutes will also be interesting as some of the less aggressive

hawks – Weale and Dale – might have changed votes from preferring hikes to keeping

rates on hold due to softer data. A change in the voting result from 6-3 to 7-2 or even

8-1 (über-hawk Sentance has most likely not changed his call for a 50bp hike) could

lead to lower UK rates and weaker sterling. If the 6-3 result is repeated, we don’t

expect much market impact.

CPI data released earlier this week in Switzerland came in short of market

expectations, indicating limited price pressure in Switzerland for the time being.

Coupled with a strong Swiss franc, an early June rate hike appears less likely. This

weighed temporarily on the Swiss franc, which nonetheless was soon bought again –

the franc being the most obvious hedge in the currency market against European debt

concerns. The coming week will also see speeches from both SNB’s Jordan (Tuesday)

and Danthine (Friday).

In Asia, the main event next week is the release of Q1 GDP in Japan. We expect

GDP to have contracted 1.3% q/q AR following a similar contraction in the previous

quarter. The main explanation is of course a very weak March in the wake of theearthquake and tsunami on 11 March. We expect domestic demand to have been

broadly flat in Q1 and foreign trade to have subtracted slightly from growth. The

biggest drag on growth in Q1 has probably been inventories, which expect to have

subtracted close to one percentage point from GDP growth in Q1. However, as seen in

the chart, the biggest negative impact on GDP growth will be in Q2, where we

currently forecast GDP will contract 4-5% q/q AR.

We do not expect any major news in connection with the Bank of Japan’s (BoJ)

monetary meeting on Friday. BoJ is currently in wait and see mode, where it wants a

clearer view of the impact on the economy from the earthquake before it decides on

any additional easing measures. In addition, it should be remembered that there is

already considerable room to purchase financial assets and expand BoJ’s balancesheet within the easing measures already announced. Of its JPY10trn asset purchase

programme, so far less than JPY4trn has been utilised. It appears that BoJ’s own

macroeconomic forecast also assumes a contraction in GDP in Q1 and Q2 and for that

reason it now looks most likely that BoJ will not expand its asset purchases further.

Scandi

The most interesting release in Denmark is consumer confidence on Wednesday.

Unlike in most other countries, Danish consumer confidence stopped rising at the end

of 2009 and has since been at levels consistent with only very modest growth in

consumption – which is exactly what has been seen in practice. The majority of

consumers still think that the country’s economic situation is worse than a year ago,

which it clearly is not, but this reflects the way the political debate is focusing on thelong-term problems facing public finances. These are not new problems, but the

potential consequences are now clearer in the form of lower pensions, higher taxes

and cuts in public services. In the longer term, it should be good for consumer

confidence that Danish politicians are so keen to reduce a deficit which, relative to

other countries, is not that big, but here and now it is pulling the other way. There is

no immediate reason why the May index should be any better, and in fact we

anticipate a small seasonal decrease.

Japan�s GDP expected to contract in

Q1

Source: Reuters Ecowin and Danske Markets

Consumers see Denmark in decline

Source: Reuters Ecowin/Danmarks Statistik

Sweden: Housing market going soft?


06 07 08 09 10 11 12

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Industrial production>>

% q/q<<GDP

% q/q AR

03 04 05 06 07 08 09 10 11

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Consumer confidence

Situation of c ountry over year ago

07 08 09 10 11

-2,5

0,0

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7,5

10,0

12,5

-2,5

0,0

2,5

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12,5% y/y % y/y

House prices




Weekly Focus

Not much interesting data is due to be released in Sweden over the coming week: only

house prices (17 May, 09:30 CET) will really be of any interest. However, the Swedish

National Debt Office (SNDO) will release a new forecast for government finances (18

May, 09:30) and – the short version – outcomes since the last forecast has been

stronger, which means the SNDO will probably further reduce net borrowing needs, at

least short term. But the lack of bond supply should start to weigh on the market. We

believe there is a chance that the SNDO could give some indications on what to do as

the national debt approaches zero with an ever-surprising speed. So read its forecasts

carefully – we will.

Significant releases are thin on the ground in Norway in the coming week, the sole

exception being the external trade figures for April, including price and volume

indices for Q1. We are most interested in import prices for consumer goods, which

will help give us an idea of how higher global inflation for many goods, combined

with a stronger NOK, will come to affect consumer prices. As the chart shows, prices

for consumer goods at the import level rose quite a long way in H2 10, and this began

to feed through to import prices in the CPI around new year. With commodity prices

still high, there is a risk of continued strong global inflation, which could lead to a

surprisingly powerful inflationary impulse from import prices given that NOK is

relatively strong.

Market Movers ahead

Source: Bloomberg and Danske Markets

Global movers Event Period Danske Consensus Previous

Mon 16-May - EUR Eurogroup meeting

11:00 EUR HICP m/m|y/y Apr 0.5%|2.8% ...|2.8%

16:00 USD NAHB Housing Market Index Index May 17 16

Tue 17-May - EUR Ecofin meeting

- CHF SNB's Jordan speaks i n Geneva

10:30 GBP CPI/HICP Inflation m/m|y/y Apr 0.6%|4.0% 0.7%|4.1% 0.3%|4.0%

11:00 DEM ZEW economic sentiment Index Apr 4.5 5.0 7.6

11:00 DEM ZEW Current situation Index Apr 86.0 88.0 87.1

14:30 USD Housing starts 1000 (m/m) Apr 570 (3.8%) 549 (7.2%)

Wed 18-May 10:30 GBP Minutes from BoE meeting

2 0:0 0 U SD M in ut es from F OMC me et ing

Thu 19-May 1:50 JPY GDP, preliminary q/q|ann 1st quarter -0.3%|-1.3% -0.5%|-2.0% -0.3%|-1.3%

14:30 USD Initial jobless claims 1000

16:00 USD Existing home sales m (m/m) Apr 5.30 (3.9%) 5.20 (2.0%) 5.10 (3.7%)

16:00 USD Philadelphia Fed. Index May 20 20.5 18.5

Fri 20-May - JPY BoJ Monetary Policy Announcement 0.10% 0.10%

15:40 CHF SNB's Danthine Speaks at University St. Gallen

Mon 16-May 10:00 NOK Trade balance NOK bn Apr 32.3

Tue 17-May 9:30 SEK House prices SEK mn 2.035

Wed 18-May 9:00 DKK Consumer confidence index May 1.5 2.0

Norway: Import prices on the way up?



http://slidepdf.com/reader/full/weekly-focus 5/215 | 13 May 2011www.danskeresearch.com

Weekly Focus

Global Update

Focus on Finland, Portugal and Greece continues

Focus this week remained on European debt woes. In Finland, an agreement between the

two main political parties (NCP and SDP) to give its support to the Portuguese bailout

package if a list of conditions is fulfilled was reached on Wednesday night. Also the

leader of Finland’s euro-sceptic party, the True Finns, has said he won’t join talks to form

a government coalition.

Speculation continued about a EUR60bn aid package for Greece. On Thursday, German

finance minister Schaeuble said that Germany would back further support for Greece if

the country continues to have problems raising funds on markets, but only in return for

more reforms. Greece will run out of money in 2012 unless it can secure a new rescue

package and/or a maturity lengthening of bonds. Greek unemployment figures for

February released on Thursday showed an increase to 15.9% up from less than 7% when

it bottomed back in early 2008.

The Survey of Professional Forecasters (SPF) inflation expectations published in the

ECB’s monthly bulletin continued to increase for expectations one and two years ahead

while remaining almost unchanged (up from 1.95% to 1.96%) for five-year inflation

expectations. This gives us even more reason to expect Trichet to say “strong vigilance”

at the next meeting and then raise rates in July. The ECB’s preferred measure of market

expectations is 5y5y inflation expectations, which remain on an upward trend.

This view is also supported by data that suggests growth for the euro area as a whole

remained strong in early 2011. In Germany and France GDP growth in Q1 was a solid

1.5% q/q and 1.0% q/q, respectively. German export and import figures were also

surprisingly strong for March. Other German data has been rather soft recently and in

particular the drop in retail sales in March was rather discomforting. The strong trade data

significantly reduces the likelihood that the German economy has started weakening

significantly in Q2.

US: The US consumer should recover

The US economy continues to be in a phase of mixed data as the effect from higher oil

prices still lingers. US retail sales disappointed slightly with core sales only rising 0.2%

m/m in April. However, it follows three strong months in nominal growth which

unfortunately due to the rise in inflation has translated into more moderate growth in real

terms. The latest decline in oil and gasoline prices will provide a renewed tailwind going

forward. And with stronger job growth, we believe consumption growth will rise to 3.0%in Q2 and 4.0% in Q3. This will mark an end to the soft patch in the US economy. In the

short term, lagged effects from the softer Q1 will probably be visible in data. But as we

get through the summer we believe a picture of a rebound in growth will materialise.

Greek government bond holders

Source: BIS, IMF and Danske Markets estimates

Strong German trade data

Source: Ecowin and Danske Markets

US retail sales still on healthy path

despite weaker reading in April

Source: Ecowin

63

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Greek banks

Greek Central Bank

Other domestic

EU, IMF

ECB

German banks

French banks

Other banks

other foreign

investors

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Retail sales >>

<< Retail sales ex. autos, buildingmaterials and gasoline



Weekly Focus

The mixed picture currently was visible in the NFIB small business optimism index

which declined for the second month in a row and continues to be very decoupled from

ISM which represents large companies. This probably reflects that the domestic economy

is still under strain in some sectors – not least construction – whereas larger corporations

benefit more from growth outside the US. Initial jobless claims declined as expected as

distortions in data are fading. But we should see further declines in the coming weeks to

remove the concern over recent weaker signals. Trade data showed a significant increase

rebound in export volumes in March of 3.2% m/m, putting exports back on a strong

growth trend. Thus, it still seems that growth in emerging markets is providing strong

support to the US industrial sector.

Growth slows in China, but inflation eases less than expected

On balance, the April data released last week suggests that growth in China has finally

started to slow, see Flash Comment – China: Growth slows, but inflation eased less than

expected . Slower growth has for some time been evident in the PMIs but until the April

data there had been few signs of slower growth in the hard economic data. Industrial production – the most reliable indicator we have for GDP growth – was significantly

weaker than expected and dropped 1.6% m/m according to our own seasonally adjusted

numbers, albeit this to some degree was payback on relatively strong industrial

production in the previous month. There was also evidence of weaker growth in the

foreign trade data, where China’s import growth has slowed substantially in recent

months as can be seen in the chart. That said, it was not weakness across the board in

April. For example, fixed asset investment was surprisingly resilient in April.

CPI inflation in April eased slightly to 5.3% y/y from 5.4% y/y in the previous month.

Food price inflation has started to ease a bit, not least because of a drop in vegetable

prices (one of the main inflation drivers late last year), but on the other hand core

inflation continues to edge higher, albeit it remains relatively muted at just 1.6% y/y.

However, some of our leading indicators for inflation – such as the price components in

the manufacturing PMIs and not least money supply growth – suggest that inflationary

pressure has already peaked.

In our view, the April data is consistent with our view that GDP growth peaked in Q1 and

is poised to slow below potential in Q2 and Q3. Our view on inflation also remains

unchanged: i.e. that inflation will remain elevated around current levels until Q3, when

we expect it to start declining substantially. The April data does not suggest more

aggressive more monetary tightening; if anything, it suggests that the pace of monetary

tightening will start to slow. We expect the People’s Bank of China (PBoC) to continue to

tighten monetary policy with two additional rate hikes before we expect PBoC to go onhold in Q3.

US: Small businesses still downbeat


China�s import growth has slowed

sharply


Money supply growth suggests that

inflationary pressure has peaked


98 00 02 04 06 08 10

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<< NFIB small business index

Composite ISM >>

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Purchase of inputs, HSBC PMI >>

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http://danskeanalyse.danskebank.dk/abo/FlashCommentChina110511/$file/FlashComment_China_110511.pdf






Weekly Focus

Scandi Update

Denmark: Healthy export growth in Q1

The March foreign trade figures were a disappointment, showing no change from

February. Looking at Q1 as a whole, exports were up 4.4% on Q4 last year, which has togo down as a rather strong increase, and exports are one of the main things keeping the

Danish economy growing at the moment. In this context, though, it was disappointing

that the export growth in Q1 was due largely to the rapid growth seen in December and

January. The latest figures point the wrong way for exports. Even more disappointing is

that much of the growth in Q1 was due to exports of oil. This can be attributed primarily

to higher oil prices and is not therefore helping to boost economic activity in Denmark.

Consumer prices were 2.9% higher in April this year than last year, which is a shade

higher than our 2.8% forecast and an increase from 2.7% in March. One reason is higher

food prices – bread, meat and coffee shot up in April – and rising petrol prices are

naturally also an important factor. The sharp increase in postage prices is also evident in

the April figures, and clothing prices are now pushing inflation up rather than pulling it

down. The statistics show that phones are 57% more expensive than a year ago.

Sweden: Set for strong Q1 GDP-growth

This week we received the last pieces of the Q1 GDP puzzle (however, we never receive

the full set of primary data, which is why deviations can still be substantial) and it seems

we are in for another bout of very strong GDP. The Riksbank’s forecast is 6.6% y/y (cal

adj) and our ex ante forecast amounted to 6.8% y/y (cal adj). In Q4, preliminary GDP

calculations posted a 7.3% y/y (cal adj) reading.

Still, production data and trade balance data imply a substantial risk of an even higher

outcome. In short, our most reliable methods of estimating current GDP produce growthin the range of 6.5% to 7.5% y/y, which is why we feel compelled to hike our forecast for

Q1 growth to 7% y/y. Again, not all data are known – not by far – but this interval and

point forecast have historically worked quite well. The main difference between our ex

ante forecast and our new estimates is the composition. It does indeed seem like

consumption will come out even weaker than our rather pessimistic forecast implied. But

then again, strong net exports – in particular – mirrored by strong industrial production

more than compensate for the lack of consumption. Also, one might argue that this

composition is benign for future growth, since it implies stronger investments and more

employment, in turn pushing up the outlook on consumption. Inflation data were also

released this week and despite providing much of a surprise, it solidifies the view of a

rising and more broad-based inflation from, admittedly, benign levels.

In short, domestic news and data out this week further underline our scenario of a series

of Riksbank hikes near term.

Denmark: Exports increase in Q1

Source: Statistics Denmark

Sweden: Industrial Production strong

Source: Statistics Sweden

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Industrial Production



Weekly Focus

Norway: Norges Bank delivers the goods

As expected, Norges Bank raised its benchmark rate by 25bp at Thursday's rate-setting

meeting. According to the press release, the Executive Board considers developments

since the March monetary policy report to have been "approximately as expected". When

it comes to new information, importance was attached to the labour market being tighter than anticipated, and wage growth being "broadly in line with that projected or somewhat

higher". This is in line with our expectations, and we believe Norges Bank will stick to its

plan of raising rates again in September and December. The April inflation figures were

surprisingly high, but this was due mainly to a sharp increase in prices for air travel,

which will probably reverse in full or in part in May. We do not therefore believe that the

April figures mark any serious sea change in Norwegian inflation, but they do serve as a

reminder that much of the downward pressure on inflation in Norway is now in the

process of reversing.

Norway: Temporary spike in prices

Source: Reuters EcoWin

06 07 08 09 10 11

0,0

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2,53,0

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4,0% y/y % y/y

<< CPI-ATE

CPI-XE >>



Weekly Focus

Latest research from Danske Bank

13/5 UK Research: King is right - inflation will hit 4.9% in September

UK inflation hasn't peaked yet and will rise further according to our estimations.

We expect UK CPI inflation in April to have been 4.0% y/y.

12/5 Flash Comment - Norway: Norges Bank delivered

Norges Bank increased rates as expected. There is no change to our rate

forecasts.

12/5 Flash Comment - US: Still healthy retail sales

Retail sales were slightly softer than expected but upward revisions to past

months means the figure was close to expectations.

12/5 Research: Greek debt restructuring difficult to avoid

If Greece fails to deliver notable primary budget surpluses soon - if GDP growth

does not return, or if it cannot fund itself at reasonable rates - a debt restructuring

seems unavoidable.

11/5 Flash Comment - China: Growth slows, but inflation eased less than

expected On balance the April data suggest that growth in China is now slowing. It appears

growth peaked in Q1 and is poised to be below trend in the coming months.

11/5 UK Research: Ten good reasons why the Bank of England will keep rates

unchanged in 2011

We do not believe the BoE will raise rates in 2011. The economy is too weak and

households are seeing their spending power eroded at the fastest rate in more

than 60 years.

9/5 Flash Comment - Norway: Time to walk the walk

We expect Norges Bank to hike interest rates by 25bp on Thursday


http://danskeanalyse.danskebank.dk/abo/ResearchUKCPI130511/$file/Research_UK_CPI_130511.pdf

http://danskeanalyse.danskebank.dk/abo/FlashCommentNorway120511/$file/FlashComment_Norway_120511.pdf

http://danskeanalyse.danskebank.dk/abo/FlashCommentRetail120511/$file/FlashComment_Retail_120511.pdf

http://danskeanalyse.danskebank.dk/abo/GreekDebtRestructuring120511/$file/GreekDebtRestructuring_120511.pdf





http://danskeanalyse.danskebank.dk/abo/FlashComNorway090511/$file/FlashCom_Norway_090511.pdf

http://danskeanalyse.danskebank.dk/abo/FlashComNorway090511/$file/FlashCom_Norway_090511.pdf





http://danskeanalyse.danskebank.dk/abo/GreekDebtRestructuring120511/$file/GreekDebtRestructuring_120511.pdf

http://danskeanalyse.danskebank.dk/abo/FlashCommentRetail120511/$file/FlashComment_Retail_120511.pdf

http://danskeanalyse.danskebank.dk/abo/FlashCommentNorway120511/$file/FlashComment_Norway_120511.pdf

http://danskeanalyse.danskebank.dk/abo/ResearchUKCPI130511/$file/Research_UK_CPI_130511.pdf



Weekly Focus

Interest rates: Greece and Portugal in the limelight

Debt concerns prompted lower rates

In the European markets focus remains on Greece, as it is becoming an increasingly

demanding task to regain fiscal sustainability and it is not clear whether Greece is willing

to go through with this.

Greek government bond yield spreads to Germany remain sky-high and flows into core

European fixed income markets increased, leading to lower rates in Europe and a

significant weakening of the euro versus other major currencies. Our economists think

that the most likely scenario for Greece is a ‘mild’ restructuring involving an extension of

maturities and possibly a reduction of interest rates taking place in 2012-13. This is likely

to be combined with a new loan package from the EU and the IMF.

Overall, we think the newsflow should turn less euro negative going forward. If a

combined package for Greece is announced, it should lower market fears of an ugly debt

restructuring scenario and help to stabilise the decline in money market rates. However,until the announcement, newsflow should keep market participants alert. We expect

intense newsflow surrounding the Ecofin meeting early next week.

Bearing in mind the recent rise in inflation, 2.84% flash in April, the surge in SPF

inflation expectations and the still strong economic data out of the eurozone, we do not

believe the debt crisis or the recent softening in oil prices is a game changer for the ECB,

and unless we see a more pronounced setback in data, the ECB should stay on course and

bring the refi rate up to 2.00% by January 2012.

Long-end rates pushed down by declining data

Long-end rates have continued to fall – led by US markets as economic data weakened.

The market is starting to look overbought, but given the strong bullish momentum weremain sidelined.

Overall, the US recovery is still on track and growth is set to reaccelerate in the coming

months. In our view, the setback in US growth during Q1 was mostly driven by higher oil

prices, bad weather and possibly some negative effect from the earthquake in Japan.

These are all temporary factors, which will fade in the coming months and bring the

growth rate back into the 3-4% range for the remainder of the year.

Hence, we believe that we might soon be close to a trough in US bond yields, which

should also help to stabilise long-end rates in Europe.

Yield Forecast Update � published today

The revised forecasts include minor revisions. In Europe, our forecasts are general above

forward markets, whereas the picture is less clear in the US. Overall, the recent decline in

rates provides attractive levels for hedging interest rate exposures.

Key events of the week ahead

Data and events

• Ecofin/Eurogroup meeting (Mon)

• Eurozone final CPI (Mon)

• US housing starts/permits (Tue)

• US industrial production (Tue)

• FOMC minutes (Wed)

• US existing home sales (Thu)

• US Philadelphia Fed (Thu)

Central bank events and speeches

• Fed�s Bernanke speaks (Mon)

• ECB�s Jürgen Stark speaks (Wed)

• ECB�s Bini Smaghi speaks (Wed)

• ECB�s Constancio speaks (Wed)

• Fed�s Bullard speaks (Thu)

• ECB�s Tumpel-Gugerall speaks

(Thu)

• Fed�s Evans speaks (Thu)

• Fed�s Dudley speaks (Fri)

• ECB�s Merch speaks (Fri)

Source: Danske Markets

Fixed income looking overbought


Senior Analyst

Lars Tranberg Rasmussen

+45 4512 8534

[email protected]

Jan

11

Feb Mar Apr May

3.1

3.2

3.3

3.4

3.5

3.6

3.7

3.8

3.9

3.1

3.2

3.3

3.4

3.5

3.6

3.7

3.8

3.9% %10yr swap rate EUR

10yr swap rate USD





Weekly Focus

FX: New forecasts

We have published our new FX forecasts today, Friday, with updated expectations for

USD and CHF in particular.

Weaker USD still on the cards

The past month has seen huge swings in EUR/USD. The cross first climbed from levels

around 1.42 in mid-April to 1.49, as the market positioned itself for signals of further rate

increases at the ECB meeting on 5 May. As the market priced in a 40% probability of a

June hike ahead of the meeting, and as non-commercial investors were massively long the

EUR, the market reaction proved sharp when ECB president Trichet failed to signal a

hike at the following meeting. At the same time, speculation about the possible

restructuring of Greek debt mounted and commodity prices nosedived, so a strong

correction lower in EUR/USD seemed inevitable.

Although we do not yet know how the market’s positioning has changed in the wake of

the ECB meeting (see our update on IMM positioning data on Monday), there is much to

suggest that a large chunk of the long EUR/USD positions have been closed and that

market positioning has become less one-sided. At the same time, pricing in the fixed

income market has become more balanced, and the two further hikes we expect from the

ECB this year should therefore boost the euro. The tone from the FOMC is still soft, and

we do not expect a first hike from the Fed before mid-2012. Relative monetary policy can

therefore be expected to continue to point to a weaker USD.

The European debt crisis is still a risk to our expectation of a weaker USD. Greek

finances seem unsustainable, and the risk of restructuring – which could lead to losses in

the European banking sector and a sell-off of EUR – is ever-present. However, our euro

economists expect further loans to be extended to Greece, so avoiding or at least deferringsuch a scenario. We therefore anticipate some normalisation of the EUR risk premium in

the coming months. In this context, it should also be noted that our short-term model for

EUR/USD, which is based partly on relative interest rates, gives an equilibrium exchange

rate above 1.46.

So in the short term we expect further USD weakening, but due to a higher EUR risk

premium as a result of the debt crisis we have revised our 3M EUR/USD forecast to 1.48

(USD/DKK: 5.04). In six months we will have moved closer to the first hike from the

Fed, and we expect relative rates to gradually begin to support USD. We therefore expect

EUR/USD to trade at 1.46 (USD/DKK: 5.11) at 6M and 1.38 (USD/DKK: 5.41) at 12M.

CHF to remain strong

CHF has strengthened further as worries about Greek debt have escalated, but it is not just

fear that is boosting CHF. The Swiss economy is one of the strongest in Europe, and this

– together with low debt, a strong public budget and a current account surplus – is

keeping CHF strong. Low inflation and a strong currency have pushed back the first rate

hike in Switzerland, but we expect higher rates there before the year is over. All in all,

this suggests that CHF will stay in overvalued territory longer than previously assumed.

1-week change against EUR

Source: Bloomberg

Model estimate for EUR/USD above

1.46


Important disclosures and certifications are contained from page 2 of this report.

Senior Analyst

Sverre Holbek

+45 45 14 88 82

[email protected]

Senior Analyst

Kasper Kirkegaard

+45 45 13 70 [email protected]

-0.5% 0.0% 0.5% 1.0%

GBP

CHF

AUD

SEK

NOK

USD

JPY

CAD

NZD

+/- 2 stdev Model estimate Spot

Aug

10

Sep Oct Nov Dec Jan

11

Feb Mar Apr May

1.20

1.25

1.30

1.35

1.40

1.45

1.50

1.55

1.60

1.20

1.25

1.30

1.35

1.40

1.45

1.50

1.55

1.60

EUR/USD EUR/USD



Weekly Focus

Commodities: Consolidation after the sell-off

The past week has seen some consolidation in commodities after the marked sell-off

towards the end of last week: oil has recovered somewhat to trade close to the level we

deem reasonable in light of fundamentals and the MENA situation, grains have been soldoff after a relatively bearish USDA report while base metals are little changed on the

week after another hike in Chinese reserve requirements dented sentiment.

The monthly IEA Oil Market Report highlighted three reasons for the latest sell-off:

worries over demand destruction at elevated prices, a stronger dollar after the ECB

meeting, and unwinding of speculative positions. We agree but would add two additional

explanations: the market has overstated the current tightness in the oil market, and market

fears of Chinese growth slowing. IEA also said that OECD forward-demand cover has

declines to 58.8 days in March, mainly on seasonal factors though and due to a decline in

OPEC supplies following the loss of Libyan crude exports.

We are looking for oil to struggle to find a clear direction in coming weeks: on the one

hand, our FX strategists’ call for a stronger euro from current levels points to sometailwinds, but our economists’ expectations for data to continue to point to a soft patch in

global growth should be a constraint for prices to move higher. As a result, we would not

be surprised to see Brent crude trade in the USD110-120 per barrel range for quite a

while. However, risks are still primarily to the upside in our view: if demand growth turns

out stronger than we currently project and/or if OPEC refrains from increasing supplies as

we think it will over the summer, the oil market could tighten significantly more than the

market is looking for at present and spur another round of price surges in the black gold.

The coming week will see the release of few commodity-specific data besides the weekly

indications from USDA and DOE on crop progress and oil stocks, respectively. However,

these figures are key to watch at present due to the sensitivity of the market to the US

grains production prospects for this year and for any disruptions to oil supplies following

the Mississippi flooding.

The monthly WASDE report from USDA overall stroke a bearish tone when the first

estimates for ending stocks 2011/12 were given. Notably, the report to some extent

reverses the picture that has been painted in grains markets recently with one-way bullish

views on corn, as it made clear that increased plantings of not least corn and to some

degree wheat on the back of recent price surges will in fact lead to inventories (at least in

the US) to be partially re-built this season. Overall, the report was bearish for corn, but

we think that the market may still be speculating that USDA is underestimating the

demand for corn for ethanol production, which they said in April would rise but be

countered by reduced feed use of the grain due to elevated prices. Indeed, note that

because we expect oil prices to stay elevated, corn will continue to enjoy structural

support in the medium term in our view.

For wheat, the report was largely neutral in our view. Drought in key areas was viewed as

harmful for harvest yields and thus more than outweighed the small rise in plantings.

Note that the weekly crop progress came in on the weak side with first estimates in the

low-30% (compared with 60% at the same time last year). This suggests upside to our

forecast for wheat to decline - instead the downside be rather limited from here. For soy,

the picture is broadly the opposite of corn, with lower plantings weighing on ending

stocks as corn plantings have crowded out not least soybeans in US fields.

Weekly changes

Source: Bloomberg, Danske Markets

Today�s key points

• Mon: USDA weekly crop progress

• Tue: US housing starts

• Wed: DOE weekly oil stocks

USDA estimates of US ending stocks

Source: Bloomberg, USDA, Danske Markets.

Note: all figures in mn bushels.

Senior Analyst

Christin Tuxen

+45 4513 7867

[email protected]

-10 0 10

ICE Brent

API2 coal

Aluminium

Copper

Gold

LIFFE Wheat

Five-day change,%

0

200

400

600

800

1000

2012 2011

Corn Soy Wheat






Weekly Focus

Credit: From Portugal to Greece

Market commentary

It would probably be a great trip to hire a car and travel from Portugal (through Spain and

Italy) to Greece, but from a capital markets point of view, it’s not a pretty sight. This

week Greece returned to the headlines with speculation of an imminent debt restructuring.

Last week Portugal agreed on a EUR78bn rescue package from the EU/IMF and the

European periphery debt story is alive and kicking.

Spreads in the CDS markets took very little notice of the Portuguese situation, as it was

completely expected and from a credit point of view the EUR12bn set aside to the

banking sector is actually positive. Likewise, the Greek troubles have so far not disturbed

spreads this week (most indices are flat compared to last week) despite the significant

repercussions a Greek debt restructuring, including haircuts, would imply.

That said we don’t expect a looming “hard” restructuring of Greek debt. Instead we

believe a more likely scenario is an additional bail-out package delivered by the EU andthe IMF possibly, but not likely at the current stage, combined with a “mild” restructuring

– i.e. maturity extensions and reduction of rates. But at the end of the day, it is a political

decision.

In the primary markets, investor risk appetite for financials is coming back and activity

has been picking up during the past week. We have seen RBS and Danske Bank – among

others – coming to the markets and from the Scandi corporate space we have seen

issuance from Volvo. Furthermore, SCA and SKF have started going on road shows,

which is why we expect upcoming issuance from these.

With increased risk appetite and technicals favouring credits, we don’t foresee any

change to the recent developments in both cash and CDS spreads. They are slowlydrifting tighter.

Periphery is the buzzword this week. In Ireland AIB announced the expected liability

management exercise (LME) offering investors in subordinated papers to tender all

outstanding sub bonds (aiming for burden sharing). The tender offer is 25% of notional

for LT2s and 10% for UT2s and T1s. In comparison, Anglo Irish Bank offered 20% and

5% respectively.

It’s a complicated process, especially for CDS holders, and certain investors have decided

to challenge the outcome by taking the case to court. For cash holders it is probably a

good idea to accept the offer as Finance Minister Noonan stated: “The Minister wants to

make it clear to investors that, if the LME fails to deliver the required core tier 1 capitalgain to the bank, the Government will take whatever steps are necessary under the Credit

Institutions (Stabilisation) Act 2010 or otherwise, to achieve at least that level of

contribution. Any further action, after investors have had an opportunity to take part in

the LME, will result in severe measures being taken in respect of subordinated liabilities.

iTraxx Europe (investment grade)


iTraxx Crossover (high yield)


Chief Analyst

Thomas Hovard

+45 4512 8505

[email protected]

0

50

100

150

200

250

apr-08 okt-08 apr-09 okt-09 apr-10 okt-10 apr-11

bp

0

200

400

600

800

1.000

1.200

apr-08 okt-08 apr-09 okt-09 apr-10 okt-10 apr-11

bp






Weekly Focus

Financial ViewsEquities• Our six-month expectations for stock market performance remains at 0-5%, reflecting

that, shorter term, we see (1) input costs at high levels, continuing to put pressure on

company margins, (2) softer growth due to monetary and fiscal tightening, especially

affecting the industrial cycle, and (3) still high energy prices cutting consumer

spending. More positive numbers have started to flow from the US, supporting our

view that an economic soft patch is only temporary. We expect the recovery to be

back on track later in 2011 and hence for a 12-24 month horizon, the stock markets

should follow a positive price trend (+15-20%). Key drivers are (1) continued strong

cyclical earnings momentum (high operational gearing and positive OECD job and

credit cycle), and (2) valuation support from high implied ERPs and below-trend

earnings multiples. Our key recommendation is to underweight high beta stocks, and

overweight large cap defensives with global sales, high FCF and low debt.

Fixed income• Bond yields have moved lower on the back of concerns about Greece and position

unwinding. However, we still expect an ECB hike in July and a continuation of

gradual hiking in the coming quarters. Generally, we think the correction in US,

German and Danish bond yields will prove temporary and that yields will resume the

upward trend in the coming month as the recovery continues and focus turns back to

central bank exit strategies.

• Intra-Euroland and Scandi: We are long Germany and Italy versus Spain and France.

We also recommend buying T-bills issued from Italy, Ireland, Greece, Portugal and

Spain. We are overweight Scandinavia versus Euroland.

Credit

• We have moved to neutral on credit after spreads have continued to tighten. The

market technicals remain supportive however with limited supply and intact demand.

• Companies are still acting conservatively but we think that a change in focus is

currently taking place with companies focusing more on growth-oriented strategies.

Therefore, event risk is on the rise.

FX outlook • The euro has not yet fully stabilised following last week’s sharp sell-off. However, we

maintain our call for higher levels in EUR/USD as the support from relative monetary

policy remains intact. However, we are more cautious in the near term as the euro

sell-off could continue on further position unwinding – especially if the correction in

commodity prices (contrary to our view) runs further. Sterling has received tailwindfrom a hawkish BoE inflation report, though the struggling UK economy is likely to

rule out hikes in 2011 and keep EUR/GBP elevated going forward.

• As the market has scaled back its expectations of ECB hikes, the Scandies have been

able to reverse some of their recent losses. Furthermore, NOK has received support

from this week’s Norges Bank rate hike, while strong Swedish macro data have

helped SEK. We look for further downside in both EUR/NOK and EUR/SEK.

Equities and US 10Y yield


EUR/USD and USD/JPY


Credit spreads


Commodity prices


Jan

10

Mar May Jul Sep Nov Jan

11

Mar May

2.25

2.50

2.75

3.00

3.25

3.50

3.75

4.00

1000

1050

1100

1150

1200

1250

1300

1350

1400 Index %

<<S&P500

US 10-year gov bond >>

Dec

09 10

Apr Jun Aug Oct Dec

80.0

82.5

85.0

87.5

90.0

92.5

95.0

97.5

115

120

125

130

135

140

145

150

<<EUR/USD

USD/JPY>>

08 09 10 11

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

2.5

5.0

7.5

10.0

12.5

15.0

17.5

20.0

22.5

25.0 % points % points

<< Eur high yield spread

US credit spread (Baa)>>

May

10

Jul Sep Nov Jan

11

Mar May

2750

3000

3250

3500

3750

4000

4250

4500

60

70

80

90

100

110USD/barrel Index

LME metal prices >>

<<Oil (WTI)



Weekly Focus

Commodities

• We continue to see oil trading in the USD100-130/bbl interval this year and the latest

correction seems a bit overdone. If the dollar comes under renewed pressure as we

expect we should expect oil to trade higher once again. Grains and metals should also

continue to see support from the rise in energy costs (e.g. corn and aluminium) and

still-healthy global demand more broadly.




Weekly Focus

Macroeconomic forecast

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

Macro forecast, Scandinavia

Denmark 2010 2.1 2.2 1.0 -4.0 0.6 3.5 2.8 2.3 6.0 -2.7 43.6 5.52011 2.1 1.5 -0.2 1.4 0.3 5.9 4.6 2.9 5.9 -4.1 42.4 5.82012 1.6 1.9 0.0 1.5 0.0 4.6 4.3 1.9 5.8 -2.9 45.2 5.3

Sweden 2010 5.3 3.6 2.2 4.6 2.1 10.7 12.7 1.2 8.4 -0.1 42.0 2.42011 3.5 2.5 0.6 5.9 0.1 6.9 7.3 2.2 7.4 0.3 37.0 3.12012 2.0 2.2 0.4 3.6 0.0 4.8 4.9 1.7 6.8 0.1 36.0 3.2

Norway 2010 2.2 3.6 2.2 -8.9 3.4 -1.3 8.7 2.5 3.6 11.8 31.0 16.02011 3.5 3.8 2.6 7.2 0.0 0.2 4.2 1.8 3.3 13.0 31.0 14.72012 3.6 4.0 2.0 7.2 0.0 0.9 5.8 1.5 2.9 13.5 - 14.5

Macro forecast, Euroland

Euroland 2010 1.7 0.7 0.7 -0.9 1.4 9.7 10.1 1.6 10.0 -6.8 85.3 -0.62011 2.0 1.3 0.3 3.8 0.1 6.6 6.0 2.5 9.8 -5.8 88.9 -0.42012 1.8 1.5 0.2 4.1 0.0 5.0 4.7 1.9 9.4 -5.0 90.5 -0.1

Germany 2010 3.5 0.4 2.0 11.8 -0.1 14.4 13.8 1.2 7.3 -3.7 75.7 4.82011 3.0 1.6 1.1 7.5 0.0 8.6 8.5 1.6 6.7 -3.0 76.0 4.32012 2.3 1.9 1.0 6.0 0.0 6.0 6.2 1.8 6.2 -2.4 75.5 4.0

France 2010 1.5 1.6 1.4 -1.6 0.5 9.9 7.7 1.7 9.6 -7.7 83.0 -3.32011 2.1 2.0 0.4 3.0 0.1 6.8 5.9 1.6 9.4 -6.5 87.0 -3.12012 1.9 2.0 0.3 3.4 0.0 5.8 5.7 1.7 9.1 -6.0 90.0 -3.0

Italy 2010 1.1 0.7 -0.4 3.0 0.1 7.9 8.1 1.7 8.4 -5.0 118.9 -3.22011 1.6 1.0 0.1 3.9 0.1 7.7 6.4 1.8 8.5 -4.0 120.5 -3.02012 1.7 1.2 0.0 4.4 0.0 6.2 6.1 1.8 8.3 -3.5 120.4 -2.8

Spain 2010 -0.1 1.3 -0.7 -7.0 0.1 10.3 5.4 1.7 20.1 -9.3 64.4 -4.82011 0.9 0.6 -0.9 -1.9 0.0 6.2 2.7 1.4 21.0 -6.9 70.0 -4.02012 1.3 1.0 -0.1 3.0 0.0 5.1 4.3 1.3 20.5 -5.8 73.5 -3.5

Finland 2010 3.1 2.6 0.4 0.8 0.0 5.1 2.6 1.2 8.4 -2.5 48.4 2.92011 3.2 1.6 0.3 6.0 0.0 5.0 4.0 3.2 7.4 -1.5 51.0 2.12012 2.5 1.8 0.0 4.0 0.0 5.5 3.5 2.4 7.0 -1.0 52.5 2.3

Macro forecast, Global

USA 2010 2.9 1.7 1.0 3.9 1.4 11.7 12.6 1.6 9.6 -8.8 88.6 -3.22011 3.1 3.1 -0.2 7.4 -0.1 10.4 7.0 2.3 8.6 -10.7 95.5 -3.42012 3.4 3.2 -0.5 9.3 0.2 9.1 8.4 1.3 8.0 -6.7 97.8 -3.7

Japan 2010 4.3 1.9 2.2 0.3 0.6 24.2 1.1 -1.0 4.7 -8.0 220.0 3.12011 1.7 0.7 1.1 2.3 0.1 7.9 6.9 0.3 4.3 -5.2 220.4 2.32012 1.8 1.4 0.8 1.8 0.0 6.4 5.6 0.6 - - - 2.3

China 2010 10.3 - - - - - - 3.7 4.3 -3.3 23.6 4.2011 9.3 - - - - - - 4.5 4.0 -2.2 20.5 5.2012 9.0 - - - - - - 2.9 - - - 5.

UK 2010 1.3 0.8 0.8 3.0 1.5 5.3 8.5 3.3 8.0 -9.9 80.3 -2.52011 1.4 0.5 -0.2 4.1 0.0 8.7 6.8 4.0 7.6 -8.0 88.2 -2.72012 1.7 1.4 -1.0 6.4 -0.2 5.6 4.1 2.7 7.5 - - -2.9

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 10.02012 - - - - - - - - - - - -

Y ear GDP1

Private

cons.1

Public

cons.1

Fixed

inv.1

Stock

build.2

Current

acc.4

Im-

ports1

Public

debt4

Public

budget4

Ex-

ports1

Infla-

tion1

Unem-

ploym.3

Ex-

ports

1

Im-

ports

1

Infla-

tion

1

Unem-

ploym.

3

Public

budget

4

Current

acc.

4

Public

debt

4

Unem-

ploym.3

Public

budget4

Public

debt4

Year

Y ear GDP

1

Private

cons.

1

Public

cons.

1

Fixed

inv.

1

Stock

build.

2

Switzer-

land

Current

acc.4

GDP1

Private

cons.1

Public

cons.1

Fixed

inv.1

Stock

build.2

Ex-

ports1

Im-

ports1

Infla-

tion1

804



Weekly Focus

Financial forecast


Bond and money markets

Currency

vs USD

Currency

vs DKK

USD 13-May - 520.5

+3m - 504

+6m - 511

+12m - 541

EUR 13-May 143.2 745.6

+3m 148 746.0

+6m 146 746.0

+12m 138 746.0

JPY 13-May 80.5 6.47

+3m 82 6.11

+6m 85 6.02

+12m 87 6.22

GBP 13-May 162.8 847.6

+3m 161 811

+6m 164 838

+12m 160 867

CHF 13-May 88.2 590.1+3m 88 574

+6m 87 587

+12m 92 587

DKK 13-May 520.5 -

+3m 504 -

+6m 511 -

+12m 541 -

SEK 13-May 627.4 83.0

+3m 591 85.3

+6m 596 85.7

+12m 638 84.8

NOK 13-May 547.2 95.1

+3m 520 96.9

+6m 527 96.9

+12m 558 96.9

Equity markets

Regional

Price trend

12-24 mth.

Regional recommen-

dations

USA 15-20% Overweight

Japan 10-20% Underweight

Emerging markets (USD) 15-20% Overweight

Pan-Europe (EUR) 15-20% Underweight

Nordics 15-20% Neutral

Commodities

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012

NYMEX WTI (US$/bbl) 95 114 113 110 112 114 116 118 108 115

ICE Brent (US$/bbl) 106 122 120 116 117 118 119 120 116 119

Copper 9,624 9,900 10,000 10,100 10,200 10,300 10,400 10,500 9,906 10,350Zinc 2,414 2,450 2,460 2,455 2,450 2,445 2,440 2,435 2,445 2,443

Nickel/1000 27 26 27 27 27 27 27 28 27 27

Steel 564 570 575 580 585 590 595 600 572 593

Aluminium 2,532 2,600 2,625 2,650 2,675 2,700 2,700 2,700 2,602 2,694

Gold 1,388 1,425 1,450 1,475 1,450 1,425 1,400 1,375 1,435 1,413

Matif Mill Wheat 252 240 230 220 220 220 220 220 236 220

CBOT Wheat 786 790 785 751 701 701 701 701 778 701

CBOT Corn 672 700 705 710 715 720 725 730 697 723

CBOT Soybeans 1,380 1,360 1,370 1,380 1,390 1,400 1,410 1,420 1,373 1,405

0.75

Average

Key int.

rate

0.25

0.25

0.25

0.25

3.25

0.25

1.50

1.75

0.10

0.10

0.50

10-yr swap yield

2.46

1.55

1.85

2.10

3m interest rate

3.80

1.25

0.10

0.50

0.25

1.30

2.35

0.80

0.85

1.10

0.50

1.00

2.00

0.50

3.30

1.75

0.10

1.46

2.25

2.00

2.50

2.75

2.25

2.50

0.26

1.42

0.20

0.82

0.18

0.30

0.40

0.70

1.80

2.10

0.25

0.20

0.20

0.20

0.50

1.00

2.20

1.90

2.50

3.05

2.60

2.64

770

2.90

3.20

3.95

4.20

3.95

4.40

3.75

2.80

3.00

3.25

0.90

1.20

1.60

3.14

3.30

1.35

1.60

1.60

1.80

2.10

0.45

0.45

0.50

148

146

138

122

124

120

1.18

143.2

-

-

-

-

115.3

746

746

746

898.6

783.7

770

875

870

880

770

88.0

126.4

745.6

92.0

89.0

86.0

130

127

127

0.75

2.29

0.36

1.58

0.72

2.47

2.60

2.80

3.05

1.00

3.61

Currency

vs EUR2-yr swap yield

Risk

Low 0-5%

Price trend

6 mth.

Low

High

High

673

12-May

0-5%

0-5%

0-5%

98

25

8,7002,160

1,493

230

113

544

2,612

20122011

3.50

3.30

3.60

3.70

3.70

3.80

3.90

1.30

1.35

1.35

3.55

3.65

3.80

4.00

2.242.50

2.60

2.70

4.95

3.95

4.05

3.85

3.64

3.75

3.63

High 0-5%

1,330

754

3.46

4.05

4.05

4.44

4.80

4.85



Weekly Focus

Calendar


Key Data and Events in Week 20

Period Danske Bank Consensus Previous

- USD Debt ceiling of USD 14.294 trn reached

- EUR Eurogroup meeting

1:50 JPY Machine orders m/m|y/y Mar -10.0%|-8.0% -2.3%|7.6%

1:50 JPY Domestic CGPI m/m|y/y Apr 0.4%|2.1| 0.6%|2.0%

7:00 JPY Consumer Confidence Index Apr 36.7 38.6

9:00 DKK Wholesale prices m/m|y/y Apr 1.4%|9.0%

10:00 NOK Trade balance NOK bn Apr 32.3

11:00 EUR Trade Balance, s.a. EUR bn Mar -2.4

11:00 EUR HICP m/m|y/y Apr 0.5%|2.8% ...|2.8%

11:00 EUR Core inflation m/m|y/y Apr 0.4%|1.5% �|1.3%

11:00 ITL HICP, final m/m|y/y Apr 1.1%|3.0% 1.1%|3.0%

14:30 USD Empire Manufacturing m/m May 20.00 21.70

15:00 USD Total Net TIC Flows USD bn Mar 97.7

15:00 USD Net Long-term TIC Flows USD bn Mar 26.9

15:00 USD Fed's Bernanke (voter, neutral) speaks

16:00 USD NAHB Housing Market Index Index May 17 16

18:45 CA D Bank of Canada Gover nor Car ney speaks in Ottawa


- OTH Earnings: Wal-Mart, Vodafone, Dell, Home Depot

- EUR Ecofin meeting

- CHF SNB's Jordan speaks in Geneva

3:30 AUD Reserve Bank of Australia minutes May

9:30 SEK House prices SEK mn 2.035

10:30 GBP CPI/HICP Inflation m/m|y/y Apr 0.6%|4.0% 0.7%|4.1% 0.3%|4.0%

11:00 DEM ZEW economic sentiment Index Apr 4.5 5.0 7.6

11:00 DEM ZEW Current situation Index Apr 86.0 88.0 87.1

14:30 USD Housing starts 1000 (m/m) Apr 570 (3.8%) 549 (7.2%)

14:30 USD Building Permits 1000 (m/m) Apr 590 (0.9%) 585 (11.2%)

15:15 USD Industrial production m/m Apr 0.4% 0.8%

15:15 USD Capacity utilization % Apr 77.6% 77.4%


- OTH Earnings: Hewlett-Packard, Target

1:50 JPY Tertiary Industry Index m/m Mar -5.8% 0.8%

9:00 DKK New car sales, s.a. (Private households) m/m Apr -0.4%

9:00 DKK Consumer confidence index May 1.5 2.0

9:00 ESP GDP s.a. q/q|y/y 1st quarter

10:30 GBP Minutes from BoE meeting

10:30 GBP Average Earnings 3Ms/YoY Mar 2.0% 2.0%

10:30 GBP Unemployment % Mar 7.9 7.8

10:30 GBP Jobless Claims Change 1.000 Apr 1.0 0.7

13:00 USD MBA Mortgage Applications

20:00 USD Minutes from FOMC meeting

Monday, May 16, 2011

Tuesday, May 17, 2011

Wednesday, May 18, 2011



Weekly Focus

Calendar - continued



1:00 USD Fed's Bullard (non-voter, hawk) speaks

1:50 JPY GDP Deflator, preliminiary y/y 1st quarter -1.9% -1.6%

1:50 JPY GDP, preliminary q/q|ann 1st quarter -0.3%|-1.3% -0.5%|-2.0% -0.3%|-1.3%

4:00 NZD New Zealand Budget

6:00 USD Fed's Dudley (voter, dove) speaks

6:30 JPY Industrial production, final m/m|y/y Mar -15.3%|-12.9%

10:30 GBP Retail Sales m/m|y/y Apr 1.5%|3.0% 1.0%|2.7% 0.2%|1.3%

14:30 USD Initial jobless claims 1000

16:00 USD Existing home sales m (m/m) Apr 5.30 (3.9%) 5.20 (2.0%) 5.10 (3.7%)

16:00 USD Leading Indicators m/m Apr 0.1% 0.4%

16:00 USD Philadelphia Fed. Index May 20 20.5 18.5

19:40 USD Fed's Evans (voter, neutral) speaks


- DKK General Prayer Day - markets closed- JPY BoJ Monetary Policy Announcement 0.10% 0.10%

6:00 USD Fed's Dudley (voter, dove) speaks

6:30 JPY All Industry Activity Index m/m Mar -6.1% 0.7%

12:00 EUR Current account, s.a. EUR bn Mar -7.2

13:00 CAD CPI m/m|y/y Apr 0.5|3.4 1.1|3.3

14:30 CAD Retail sales m/m Mar 0.9 0.4

15:40 CHF SNB's Danthine Speaks at University St. Gallen

16:00 EUR Consumer confidence Net balanc May -11.6


Wed 11 - 18 GBP Nationwide Consumer Confidence index Apr 44

Mon 16 - 18 CNY Actual FDI y/y Apr 36.1% 32.9%

The editors do not guarantee the accurateness of figures, hours or dates stated above

For furher information, call (+45 ) 45 12 85 22.

Friday, May 20, 2011

During the week

Thursday, May 19, 2011



Weekly Focus

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