aug 08 danskedaily

8/9/2019 AUG 08 DanskeDaily

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www.danskeresearch.com

Investment ResearchGeneral Market Conditions

Key news

Weak US employment sent equities lower, but market staged recovery in late hours

Bond yields sharply lower

Wheat prices retreated somewhat on Friday from 23-month high

Fitch to postpone rating upgrades on demand uncertainty

All eyes on Fed meeting tomorrow

Markets Overnight

Equity markets suffered on Friday as the US employment report disappointed once

again adding only 71k private jobs in July still far from the job growth needed to

reinvigorate the US consumers seeFlash Comment. Equities staged a rebound, though,

in the last hour of trading and limited the loss in S&P500 to 0.4% after being down close

to 2% earlier in the session. Stock markets in Asia are mixed with Nikkei down while

Chinese stocks are slightly up.

US bond yields were sent sharply lower on the employment report as it raises

expectations that Fed may add further stimulus soon. PIMCOs Bill Gross comments that

Fed wont raise rates in the next 2-3 years added to the bullish sentiment in bonds. US 10-

year yields reached a new cycle low at 2.81% and have stayed close to that level in Asia

this morning. US-2-year yields went to a new record low of 0.5%.

In FX markets EUR/USD rose above 1.33 Friday and is trading slightly below 1.33 this

morning. Scandi currencies have weakened somewhat on the back of lower risk appetite.

Warnings of likely food price rises at the consumer level continue as the Russian drought

has pushed up not only wheat prices but also the price of barley, an important feed grain

for the livestock industry. Barley prices have risen 130% since mid-JuneseeFT. Wheat

prices retreated on Friday after reaching a 23-month high on speculation that farmers will

increase plantings worldwide and stock piles are highseeWSJ. A rise in consumer food

prices will work as a tax on consumption and would provide further headwind to

consumption growth globally. Oil prices fell to USD81 per barrel on the weak US job

report.

According to Financial Times Fitch ratings will announce Monday that it has pushed

back its expectations for broad rating upgrades of European companies. Despite a strong

series of earnings results this year, Fitch refers to increased demand uncertainty on the

back of the fiscal retrenchment announced by governmentsseeFT.

08 august 2010

Chief Analyst

Allan von Mehren

+45 4512 8055

[email protected]

Market movers today:

No market movers today

Market awaits Fed meeting

Tuesday

Market overview

Note:

* The iTraxx Europe Index show 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.

Source: Bloomberg

Danske Daily

07:30 1 day +/-,%

S&P500 (close) 1121.6 -0.37

S&P500 fut (chng from close) 1118.6 -0.08

Nikkei 9552.2 -0.93

Hang Seng 21677.1 -0.01

17:00 07:30 +/-, bp

US 2y gov 0.51 0.51 0.8

US 10y gov 2.82 2.82 0.2

iTraxx Europe (IG) 98 104 6.3

iTraxx Xover (Non IG) 384 472 88.0

+/-, %

EUR/USD 1.331 1.328 -0.21

USD/JPY 85.100 85.470 0.43

EUR/CHF 1.38 1.38 0.19

EUR/GBP 0.833 0.831 -0.17

EUR/SEK 9.415 9.403 -0.13

EUR/NOK 7.92 7.90 -0.23

USD

Oil Brent, USD 80.8 80.5 -0.28

Gold, USD 1208.1 1207.4 -0.06
http://danskeanalyse.danskebank.dk/abo/nonfarm07082010/$file/nonfarm_07082010.pdfhttp://danskeanalyse.danskebank.dk/abo/nonfarm07082010/$file/nonfarm_07082010.pdfhttp://danskeanalyse.danskebank.dk/abo/nonfarm07082010/$file/nonfarm_07082010.pdfhttp://www.ft.com/cms/s/0/443d72ee-a316-11df-8cf4-00144feabdc0.htmlhttp://www.ft.com/cms/s/0/443d72ee-a316-11df-8cf4-00144feabdc0.htmlhttp://www.ft.com/cms/s/0/443d72ee-a316-11df-8cf4-00144feabdc0.htmlhttp://online.wsj.com/article/SB10001424052748704268004575417672972922474.html?mod=WSJEUROPE_hps_LEFTTopWhatNewshttp://online.wsj.com/article/SB10001424052748704268004575417672972922474.html?mod=WSJEUROPE_hps_LEFTTopWhatNewshttp://online.wsj.com/article/SB10001424052748704268004575417672972922474.html?mod=WSJEUROPE_hps_LEFTTopWhatNewshttp://www.ft.com/cms/s/0/af057c58-a306-11df-8cf4-00144feabdc0.htmlhttp://www.ft.com/cms/s/0/af057c58-a306-11df-8cf4-00144feabdc0.htmlhttp://www.ft.com/cms/s/0/af057c58-a306-11df-8cf4-00144feabdc0.htmlhttp://www.ft.com/cms/s/0/af057c58-a306-11df-8cf4-00144feabdc0.htmlhttp://online.wsj.com/article/SB10001424052748704268004575417672972922474.html?mod=WSJEUROPE_hps_LEFTTopWhatNewshttp://www.ft.com/cms/s/0/443d72ee-a316-11df-8cf4-00144feabdc0.htmlhttp://danskeanalyse.danskebank.dk/abo/nonfarm07082010/$file/nonfarm_07082010.pdf


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2 | 08 august 2010www.danskeresearch.com

Danske Daily

Global Daily

Focus today: With no market movers on the agenda the market will look forward to the

Fed meeting tomorrow. Speculation has risen that Fed will soon add further stimulus as

the recovery is beginning to sputter. One option is that Fed announces it will reinvest

proceedings from expiring bonds in its bond purchase programme. Later this week focusturns to euro area GDP and US retail sales both due for release Friday.

Fixed income markets: Bond yields continue the downward trend as recovery fears

intensify in US. With Fed expected to be on hold for a very long time and possibly add

to stimuluscarry is in focus and investors are piling into the 5-7-year segments which

offer the best carry/roll down. This points to a continuation of the downward trend in

yields. There is a risk of a disappointment from Fed Tuesday, though, as it may find it

premature to add stimulus. This could trigger a slight upward correction in yields. In

Germany yields reached new lows on Friday in both 10-year and 30-year yields. The long

end continues to perform very well. With 2-year yields more locked as ECB is on a

gradual exit path this has led to a substantial flattening of the yield curve.

FX markets: Todays key events are not expected to attract much attention in the FX

market. Instead the market will be looking forward to the important FOMC meeting

tomorrow. There is growing speculation that the Fed will reintroduce new quantative

measures not least after Fridays labour market report. If new measures are introduced the

dollar is expected to suffer further.

Scandi Daily

There are no key market movers in Scandi today.

Key figures and events

Source: Bloomberg and Danske Markets

Period Danske Bank Consensus Previous

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

Monday, August 9, 2010

German exports at full steam

Source: Reuters Ecowin

US S&P500 future

Source: Danske Markets

US 10y gov yield


Scandi FX


Global FX


02 03 04 05 06 07 08 09 10

50

55

60

65

70

75

80

85

50

55

60

65

70

75

80

85Eur bn Eur bn

German exports

1084

1094

1104

1114

1124

1084

1094

1104

1114

1124

Thu Fri Mon Wed Thu Mon

2.77

2.87

2.97

3.07

2.77

2.87

2.97

3.07

Thu Fri Mon Wed Thu Mon

7.85

7.90

7.95

8.00

9.34

9.39

9.44

9.49

Thu Fri Tue Wed Thu Mon

EUR/SEK (LHS) EUR/NOK (RHS)

85

85.8

86.6

87.4

1.298

1.318

1.338

Thu Fri Tue Wed Thu Mon

EUR /USD (LHS) USD/JPY (R HS)


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Danske Daily

Todays market data: 09 August 2010

+/-

DJSTOXX50

Max 0.6 Max 1.2 OMXC20

Min -0.7 Min -1.4 OMXS30

0.4 0.7 OSE BX

+/-

DOW JONES

NASDAQ

1month 1month S&P500

Year-to-date Year-to-date NIKKEI (07:30)

EUR +/-

USD -0.28

JP Y 0.26 1day

Max ## GBP -0.14 1month Min ## NOK -1.80 Year-t-date

0.5 SEK -1.22

DKK 0.03

PLN -0.03

USD +/-

JP Y 0.37 1day

1month GBP -0.06 1month

Year-to-date CHF 0.41 Year-t-date * The chart pl ots 07:30 - 23:00 Fri and 23:00 Sun to 07:30 Mon

+/-, bp

USD USD 10Y 0

Max 0.6 Max 3.0 EUR USD 30Y -1

Min 0.5 Min 2.8 GBP JPY 10Y -40 0 DKK

SEK +/-, bp

NOK DEM 10Y -5

PLN DKK 10Y -9

SEK 10Y -7

NOK 10Y 0

PLN 10Y -2* The chart pl ots 07:30 - 23:00 Fri and 23:00 Sun to 07:30 Mon * As of closing previous trading day

## M ax 0.000 ## Max 1.100

## M in -8.780 ## M in ###

+/-

USD 10Y 0

Europe (IG) 2 -11 JPY 10Y 3

HiVol 1 -22

Xover (N -IG) 0 -58 +/-

EUR 10Y 0

DKK 10Y -1

2 -16 SEK 10Y 1

Finan. Sub. 3 -21 NOK 10Y -1

Non-finan. 3 -21* As of closing previous trading day

* Ask price ** Ask price

Oil,

Brent, $

66

33

173

173 65

1

37

17:00

28

7

31

Cre dit spre ad, iT raxx s. 11*

1day

69

3.50

2.00

1.05 1.15

1.00

0.50

0.950.50

1024

472

3

07:30(-1)*

152

17:00

104

Finan. Sr.

1month

114

07:30

28

38

2.69

3.70 20

5.85

1

07:30(-1)*45

07:30

Swap Spread, bp**

3.34

2.622.71

2.57

3.34

5.83

2.64

2.57

0.91 4.01

1.06 1.030.74

17:00

2.52

0.88

17:00

2.82

9.60

-2.96

19.61

-8.67

07:30

14.09

YIELDS & INTEREST RATES

-10

133.07

110.40-4.25

792.26

132.79

4.00

2.82

274.71

83.14

493.09

0.36

5.10

1.95

Industrials

2.59

C R B

1M future

RB, Raw

1207.35

83.28

941.51

07:30

940.29

Gold, $

07:30

17:00

113.23 113.49

745.12

790.46

399.07399.10

745.09

16

103.86

17:00 07:30

85.10

159.78 159.72

85.47

Spread,

bp

80.5207:30

374

STOCKS

0.6% 9552 -1.0%

FX & COMMODITIES

-10.42

0.41

Po l icy Rate

103.45

USD2Y USD10Y 0.25

3M

6.38

Close

2512 -1.0%

-2.8%

419

2288

1065

-0.4%

Close

-1.3%

4.1%

10654

1122

-0.9%

0.0%

-0.2%

-0.2%

3.4%

0.30

-1.49

0.71

0.25

1.27

0.090.06

0.82

3.30

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

USDJPYGBPFRF ITL DKKSEKNOKPLN

10Y Yield Spread to Germany

-8.8

-7.8

-6.8-5.8

-4.8

-3.8

-2.8

-1.8

-0.8

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

USD2Y USD5Y USD10Y

US Yield Curve

D-t-D +/-, bp (right axis)

07:30 (left axis)

1 month ago (left axis)

-4.6

-3.6

-2.6

-1.6

-0.6

0.4

0.0

0.5

1.0

1.5

2.0

2.5

3.0

DEM2Y DEM5YR DEM10Y

German Yield Curve

D-t-D +/-, bp (right axis)

07:30 (left ax is)

1 month ago (left axis)

-0.70

-0.30

0.10

0.50

-0.70

-0.30

0.10

0.50

15 16 17 18 19 20 21

S&P500 Intraday, %

Grey line indicates closing of Danish markets

-1.4

-0.7

0

0.7

-1.40

-0.70

0.00

0.70

09 10 11 12 13 14 15 16 17 18

Eurostoxx Intraday, %

Grey line indicates opening of US markets

2.80

2.85

2.90

2.95

0.49

0.52

0.55

0.58

07 10 13 16 19 22 01 04

USD-Yields Intraday

U SD 2Y (lhs) U SD 10Y (rhs)

131.2

131.7

132.2

132.7

131.2

131.7

132.2

132.7

07 10 13 16 19 22 01 04

EUR/USD Intraday

0

100

200

300

400

500

600

700

0

20

40

60

80

100

120

140

160

Aug Sep Nov Dec Feb Mar May Jun Aug

Credit spreads

iTraxx Europe (IG) (left axis)

iTraxx Xover (Non IG) (right axis)


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Danske Daily

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