weeklyfocus_310513

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Investment Research

Market movers ahead

We expect the ISM manufacturing index and the employment report to show

improvement in the US economy and the US labour market.

We do not expect any significant policy changes at the monetary policy meetings of

the Bank of England and European Central Bank next week.

German factory orders and industrial production are also likely to attract some

attention.

We expect manufacturing PMIs in Sweden and Norway to indicate some

improvement in these economies.

We expect the currency reserve figures in Denmark to show that Nationalbanken did

not need to intervene to support the DKK in May.

Global macro and market themes

Focus remains on the increased market volatility and the sell-off in Nikkei. We do not

think that an end to the current risk rally is imminent but volatility is likely to remain

high.

US bond yields spiked following strong consumer confidence figures and increased

speculation about when the Federal Reserve will start tapering asset purchases.

Over the past week, we saw more signs of slight improvement in the euro area

economy as consumer confidence and business sentiment rose in May.

Swedish economic growth exceeded expectations in Q1, which may dampen

expectations of a Riksbank rate cut in July slightly.

The Danish economy rebounded in Q1 following the steep downturn in Q4 last year.

Focus

ECB Preview: The end of monetary easing.

Volatile markets Will job growth pick up the pace?

Source: Reuters EcoWin, Danske Bank Markets Source: Macrobond

31 May 2013

Important disclosures and certifications are contained from page 16 of this report.

Editors

Allan von Mehren

+45 4512 8055

[email protected]

Steen Bocian

+45 45 12 85 31

[email protected]

Weekly FocusFed exit moving closer

Contents

Market movers ahead ........................................... 2Global macro and market themes ............ 5Scandi update ................................................................. 8Latest research from Danske Bank .... 10Macroeconomic forecast .............................. 11Financial forecast ................................................... 12Calendar ........................................................................... 13

Financial views

Major indices

31-May 3M 12M

10yr EUR swap 1.71 1.70 2.10

EUR/USD 130 130 127

31-May 6M 12-24M

S&P500 1654 0 to +5% 5%-10%

Source: Danske Bank
http://danskeanalyse.danskebank.dk/link/FlashCommentECBpreview310513/$file/FlashComment_ECBpreview_310513.pdfhttp://danskeanalyse.danskebank.dk/link/FlashCommentECBpreview310513/$file/FlashComment_ECBpreview_310513.pdfmailto:[email protected]:[email protected]://danskeanalyse.danskebank.dk/link/FlashCommentECBpreview310513/$file/FlashComment_ECBpreview_310513.pdf

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2 | 31 May 2013www.danskeresearch.com

Weekly Focus

Market movers ahead

Global

Two releases will dominate the US calendar in the coming week: the ISM

manufacturing index and the employment report for May. Both releases will be highly

interesting, as they will provide information as to whether the recent softness in the

US economy is coming to an end. We expect to see improvements compared with the

previous two months, with an increase in payrolls of 190,000 new jobs and a rise in

the ISM index to 51.2. This would confirm the recent indications we have received

from consumer sentiment and construction activity that growth is picking up.

Also of interest is the ISM non-manufacturing index, which we expect to increase in

line with the manufacturing index. There are several Fed speeches on the agenda, with

the most interesting likely to be Kocherlakota and Bernanke this weekend and

Williams on Monday.

A month ago Mario Draghi opened the door for cutting the deposit rate to negativeterritory. The question now is whether he will deliver or whether this was yet another

case of verbal intervention. We think that the likelihood of a deposit rate cut at the

upcoming ECB meeting is close to nil and the chance that the ECB will move to

negative rates at a later stage is very small. The ECB is also considering introducing

an ABS purchase programme. We doubt it is ready to give details yet and if the

programme is announced it might underwhelm. The likelihood that the ECB cuts the

refinancing rate to 0.25% is higher but the most likely outcome is that Mario Draghi

will deliver nothing but soft wording.

In terms of data releases we will get German factory orders and industrial production.

Following two strong months with increases in factory orders of 2.2% m/m, we

forecast a decline in April. Growth in industrial production was also positive in the

previous two months and here we expect a decline as well. These expectations are

supported by manufacturing PMI new orders, which declined to 48.1 in April. Flash

PMIs in Italy and Spain are expected to increase in accordance with the PMIs in the

euro area. Euro area retail sales will also be released during the week. Euro area retail

sales and unemployment in France will also be released during the week.

Next week PMI surveys for May will be released in the UK: manufacturing PMI on

Monday, construction PMI on Tuesday and service PMI on Wednesday. All three

increased in the April reading, and as the service industry weighs above 75% of the

UK economy, the service PMI will draw the most attention.

We expect no change in Bank of England policy at Thursdays meeting. The May

Inflation Report had a slight upward revision to its GDP forecast and unless the

outlook for recovery deteriorates from this point, we think the MPC will stay on hold

in the coming months. Note also that Funding for Lending statistics for Q1 13 will be

released on Monday.

In China the most important event next week is the release of the Chinas official

manufacturing PMI published by Chinas National Bureau of Statistics (NBS). The

drop in the flash estimate for HSBC manufacturing PMI to 49.6 also suggests that the

Will job growth pick up the pace?

Source: Macrobond Financial

Expected decreases in German

numbers after two strong months

07 08 09 10 11 12 13

73

83

93

103

113

123

133

85

90

95

100

105

110

115

1202005=100 >

Source: Reuters EcoWin

UK: All PMIs increased in April


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Weekly Focus

NBS manufacturing PMI is poised to decline to 50.0 in May from 50.6 in April and

hence we cannot not rule out the possibility that it could also drop below 50. The new

order-inventory balance has been more healthy in the NBS manufacturing PMI,

suggesting it could perform slightly better than the HSBC manufacturing PMI in May.

In Japan we have very light calendar ahead of us this week. There will probably besome focus on the weekly data for Japanese investors purchase of foreign stocks and

bonds on Thursday after previous data showed that Japanese investors were again

substantial net sellers of foreign bonds in the week ended 24 May. This questions the

market assumption that Japan will eventually become substantial net buyers of foreign

bonds in the wake of the aggressive monetary easing.

Scandinavia

In Denmark, Tuesday will see the release of the foreign exchange reserves for May.

We expect the FX reserves to be unchanged following a month in which the Danish

krone has traded close to its central parity against the euro. As such, an independent

Danish rate cut does not seem to be on the cards. Tuesdays data will be followed by a

number of other interesting releases. House prices for March are due out on Thursday

while Friday will see the release of Danish industrial production for April. On Friday,

the monthly securities statistic and foreign portfolio investments in April are due to be

released.

In Sweden, the week ahead will allow us to take a fresh look at the Riksbank, with

forward-looking PMI data from both the manufacturing (Monday, 08:30 CET) and

services sectors. In line with Swedish trade-weighted PMI data, an upward move

should not come as a surprise, especially since last month also saw a reversal of

previous SEK strength.

Norwegian industry has proved remarkably resilient after the European debt crisis hit

the global economy with a vengeance last summer. In spite of a strong Norwegian

krone and Norways high wage level, the industrial sector has done significantly

better in Norway than in neighbouring countries. After a strong start to 2013,

industrial production fell back in March but this trend probably reversed in April. We

expect industrial production to have grown 0.4% m/m in April, driven by continued

strong growth in oil-related industries. The PMI index has signalled a broadly

sideways movement since the beginning of this year and edged below 50 in April,

indicating a decline in industrial activity. Given the signs of stabilisation in Europe

and a recovery in the US, we expect Norwegian PMI to have increased to 50.2 in

May. If we are right, the PMI index would still seem to underestimate the pace of

industrial activity in Norway probably because the index does not fully catch the

strength of oil-related industries.

Possible that NBS manufacturing PMI

could also move below 50

07 08 09 10 11 12 13

-1.25

-1.00

-0.75

-0.50-0.25

0.00

0.25

0.50

0.75

1.00

1.25

40

45

50

55

60

2 month lag

% m/m

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Market movers ahead

Global movers Event Period Danske Consensus Previous

Mon 03-Jun - CNY NBS manufacturing PMI (released Saturday) Index May 50.0 49.9 50.6

- USD Fed's chairman Bernanke (voter, neutral) speaks at Princeton (Sunday)

- USD Fed's Kocher lakota (non-voter , dove) speaks (Saturday)

- GBP Funding for lending statistics 1st quarter

9:15 ESP PMI manufacturing Index May 45.0 44.7

9:45 ITL PMI manufacturing Index May 46.1 45.8 45.5

9:50 FRF PMI manufacturing, final Index May 45.6 45.5 45.5

9:55 DEM PMI manufacturing, final Index May 49.1 49.0 49.0

10:00 EUR PMI manufacturing, final Index May 47.9 47.8 47.8

10:30 GBP PMI manufacturing Index May 50.1 49.8

13:20 USD Fed's Wil lams (non-voter, dove) speaks

16:00 USD ISM manufacturing Index May 51.2 50.5 50.7

Tue 04-Jun 16:00 DKK Currency reserves DKK bn May 491.7

Wed 05-Jun 9:15 ESP PMI services Index May 44.6 44.4

9:45 ITL PMI services Index May 47.4 47.5 47.0

9:50 FRF PMI services, final Index May 44.4 44.3 44.3

9:55 DEM PMI services, final Index May 49.4 49.8 49.8

10:00 EUR PMI services, final Index May 47.6 47.5 47.5

10:30 GBP PMI services Index May 53.2 52.9

11:00 EUR Retail sales m/m|y/y Apr 0.1%| -0.2%|-0.6% -0.1%|-2.4%

Thurs 06-Jun 1:50 JPY Purchase of foreign stocks JPY bn -1117.3

7:30 FRF Unemployment % 1st quarter 10.5 10.6%12:00 DEM Factory orders m/m|y/y Apr -0.5%| -1.3%|0.2% 2.2%|-0.4%

13:45 EUR ECB announces refi rate % 0.50% 0.50% 0.50%

13:45 EUR ECB announces deposit rate % 0.00% 0.00% 0.00%

14:00 USD Fed's Plosser (non-voter , hawk) speaks

14:30 EU R ECB pr es s co nfer ence

Fri 07-Jun 12:00 DEM I ndustrial production mm/|y/y Apr -0.3%| 0.0%|-0.8% 1.2%|-2.5%

14:30 USD Nonfarm payroll 1000 May 190 168 165

14:30 USD Private payroll 1000 May 190 175 176

During the week

Scandi movers Event Period Danske Consensus Previous

Mon 03-Jun 8:30 SEK PMI Index May 50.5 49.6

9:00 NOK PMI Index May 48.9

Tue 04-Jun

Wed 05-Jun

Thurs 06-Jun 9:00 DKK House price index m/m|y/y Mar 1.8%|1.5%

Fri 07-Jun 7:00 DKK CB's securities statistics Apr

7:00 DKK Foreign portfolio investments Apr9:00 DKK Industrial production m/m Apr 0.0% 0.7%

10:00 NOK Industrial production m/m|y/y Apr 1.0%|-8.6%

During the week

Source: Bloomberg and Danske Bank Markets

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Weekly Focus

Global macro and market themes

Focus remains on increased market volatility as the sell-off in the Nikkei continued over

the past week and US treasury yields broke higher. We expect the environment of higher

volatility to continue as markets get more nervous when eying the exit for the Fed.Following a long period of massive Fed stimulus, we are now finally moving closer to the

exit as data and fundamentals in the US improve.

Uncertainty over how the exit will take place in itself can justify a bit of increase in risk

premia in both equity and bond markets. It also comes at a time of technically

overbought stock markets in for example the US and Japan and therefore could trigger

more profit taking than would otherwise be the case.

While making things more tricky for investors, higher volatility is actually desirable from

an economic and financial stability standpoint. Too long periods of low volatility often

mean we underestimate the risk as was very much the case prior to the financial crisis.

What will happen when the Fed starts tapering?

A key question in markets now is of course what will happen when the Fed starts tapering

asset purchases. Will it be the end of the risk rally and the start of a severe bond sell-off

some believe we have a bubble in bonds. There are many signs that the Fed could start

tapering as early as September as most of the doves within the Fed have opened up for

this if the labour market continues to improve at the current pace for another 3-4 months.

As we argued inFlash Comment: The end of risk rally? Probably not, we dont think this

marks the end of the medium-term risk rally. But it willlikely lead to higher volatility and

more frequent corrections. Still, we see the list of supporting factors for risk assets as

being fairly long:

First, the reason we are eying the Fed exit is because US fundamentals are

improving fast and the outlook for US growth in the coming years is the best in perhaps

a decade. Consumers are seeing increasing tailwind from rising house prices, increasing

stock markets, stronger job growth, a decline in inflation and easier access to credit.

Housing activity is recovering from low levels and importantly fiscal policy will turn

from a significant headwind to an almost neutral factor already next year. And now we

see more signs that the US is leaving the soft patch in early 2013. This was supported

over the past week by a rise in consumer confidence to the highest level in five years

partly driven by more optimism about the job situation. Case/Shiller house prices also

rose 10.9% y/y in Marchthe strongest increase since 2006.

Second, the advanced economies (particularly the US) are benefiting from a positive

supply shock from the oil market. Despite a gradual global recovery, we look for oil

prices to trend lower over the coming years. We look for Brent oil prices to reach just

above USD90 by the end of 2014 due to the improved supply situation and softer demand

from China see Commodities Forecast Update: Consumers, beware of higher USD

amid likely H2 sell-off, 28 May 2013. This marks an important regime shift from the

super-cycle days where commodity prices trended higher and eroded purchasing power. It

also gives central banks much more flexibility in supporting the economy and is one of

Nikkei and Japanese 10Y yield

Source: Reuters EcoWin, Danske Bank Markets

US consumers more optimistic

08 09 10 11 12 13

20

30

40

50

60

70

80

90

20

30

40

50

60

70

80

90Index Index

US consumer confidence(Conf. Board)

Source: Reuters Ecowin

Falling oil prices to keep global

inflation subdued for long time

Source: MacroBond and Danske Markets
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Weekly Focus

the reasons why the Fed will probably tighten policy only gradually when it starts

normalisation.

Third, we believe the recovery in the euro area will finally materialise over the

coming year. We have seen a few failed attempts to recover but we believe things have

changed enough to finally see a small lift in euro area activity. The euro crisis has easedconsiderably, fiscal policy tightening will slow down and the US recovery should also

benefit euro area exporters. Over the past week, we have seen more signs of slight

improvement as the EU Commissions data on consumer confidence and business

sentiment rose in May. Money growth also picked up further and points to a pick-up in

activity fairly soon (see chart).

A fourth factor is the search for yield driven by the very low rate on safe assets . To

get a return, investors are forced out on the risk curve. As short rates are likely to stay low

for a very long time, the search for yield will likely be in place for some years to come.

Finally, we expect liquidity to stay ample for a long time even if the Fed starts

tapering in September. There are no signs that the Bank of Japan will change itsaggressive asset purchase programme prematurely and, even with the Fed tapering, plenty

more USD will flow into the system through year-end.

A risk factor that is still looming in the market is fear of a Chinese hard landing. But in

this respect, it is important that the low inflation is giving the Chinese government much

more room to manoeuvre and ease policy if necessary. Overall we look for global equities

to rise a further 5% by year-end. This will be a lower pace than seen in the first half of

this year and it will likely take place with higher volatility.

Bond yields to trend higher amid volatility

US bond yields broke to the highest level in over a year over the past week as the US 10-

year reached 2.22%. This brings back the question: are we going to see a strong rise in

bond yields now after trading in a broad range over the past one and a half years?

We do believe yields have started a rising trend. But also in this area we expect to see

higher volatility. The Fed has made it very clear that the tapering depends on job growth.

Hence payroll numbers are more important than ever. But they are also still very volatile

and this is likely to spill over to bigger swings in bond yields. We see job growth

improving to around 250,000 on average over the next six months, which should be

enough for the Fed to start tapering in September and we see the risk that the pace of

tapering goes faster than the market expects.

This is also likely to spill over to the German bond market and put more pressure on

bunds. The ECBs clear reluctance to cut the deposit rate has added to the rise in German

yields. Many ECB members over the past week have indicated that the ECB is ready

logistically to do it but that it could have contradictory effects as banks may put the cost

from negative deposit rates on customers through higher lending rates which would

clearly be counterproductive. The ECB seems much more focused on improving the

transmission mechanism and is pushing for more capital in the banks and work with EU

to plan an ABS market for SME loans.

M1 growth strengthens further

pointing to euro area recovery

96 98 00 02 04 06 08 10 12 14

-8

-6

-4

-2

0

2

4

6

8

-20

-15

-10

-5

0

5

10

15

20>

% y/y % y/y

Source: Reuters Ecowin and Danske Markets

Global liquidity rising at fast pace

also when Fed starts tapering

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2003 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014

Monetary base, western world, USD trn


Rising yield trend starting in US


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Peripheral bond markets continue to do well despite the rise in volatility. Spreads to

Germany in Spain and Italy have been fairly stable over the past month but we still see

the medium-term trend as being more spread compression. Ample liquidity, search for

yield and improving fundamentals will continue to support peripheral bond markets. Over

the past week, the EU Commission removed Italy from the list of sinners as the budget

deficit is now below the 3% limit. France and Spain were given two more years to reach

the limit and the Netherlands was given one more year.

Relatively calm currency markets

Despite the increasing focus on Fed tapering and rising US yields, EUR/USD continues

to be range-bound around 1.30. This is partly because the focus on Fed tapering has been

accompanied by the clear signal that the ECB is not likely to cut the deposit rate. Hence

the yield spread between US and Germany has not moved much (see chart). Moving

forward we still see that the range will move gradually lower to the high 1.20s from the

low 1.30s on a three-month horizon. USD/JPY has corrected a bit further over the past

week. Short term we believe we are in a consolidation phase in USD/JPY and see the

market range-bound around current levels. In the medium to longer term, we still look forfurther JPY weakness, though, as the BoJ continues easing and Fed tapering starts.

Data in Japan continued to show strength as PMI manufacturing rose further and

industrial production rose strongly in April. Interestingly, the deflationary pressures are

also easing. Core CPI in April was -0.4% following -0.5% in March and Tokyo CPI for

May points to a further rise. We believe Japan will leave deflation in Q3. The challenge in

Japan will come in 2014 when fiscal policy tightens quite significantly. But for now

growth is clearly strengthening.

Global market views 3-6 month horizon

Asset class Main factorsEquities

Global sto cks up 0-5% over three mth. Cyclicals have not yet normalised. Stronger EPS mom entum in H2 2013.

Overweight Nordics, Underweight/neutral US Fixed income to equities rotation has sti ll some way to go and resil iance to QE tapering

2013 the first year without financ ial stress events s ince 2007

Bond marketCore bond yields grinding higher Global recovery, Fed tapering closer

US to underperform Germany US economic outlook strong, Fed tapering, ECB on hold for very long

Peripheral s preads to t ight en gradually Ample liquidit y, s earc h f or yield, impro ving f undament als

Credit spreads cont inue gradual t ightening Ample liquidit y, search fo r yield, st rong corporate fundamentals

FX

EUR/USD - risk skewed to the downside Fed exit moves closer

USD/JPY - further upside BoJ to continue monetary easing and Fed exit

EUR/SEK - medium trend lower Stro ng fundamentals, sho rt term upside risk fro m po tential rate cut

EUR/NOK - slow move lower Strong fundamentals and Norges Bank on hold

Commodities

Oil prices to s tabilise in H2, lower in 2014 Mass ive supply shock f rom US shale and OPEC over-produc tion to weigh

M etal prices to be resilient Copper to stay vo latile, aluminium to head lo wer as energy co sts co me under pressure

Go ld prices to co rrect lo wer still P art o f the bubble no w eliminated but more declines in sto re

Agricultural risks remain on the upside Do wnside in the near term but extreme weather events remains a key challenge

Source: Danske Bank Markets

Peripheral spread compression to

continue


EUR/USD range trading but medium

trend is for stronger USD

Source: MacroBond

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Scandi update

Denmark higher unemployment in April no great cause forconcern

The number of Danes out of work fell during the first three months of the year butThursdays figures for gross unemployment showed an increase of 1,500 in the number of

jobless to 155,900 in April. However, the decrease in Q1 was mainly for technical

reasons relating to the reduction in the unemployment benefit period. Given that

joblessness already tends to fluctuate somewhat from month to month, this means that it

will take more than a single month of rising unemployment to get us seriously worried.

The week also brought no fewer than three forecasts for the Danish economy, with the

government, the Economic Council and the OECD all presenting their take on the outlook

through to 2014. All expect weak growth of between 0.2% and 0.5% this year and the

beginnings of recovery in 2014 with growth of between 1.6% and 1.8%. The Danish

economy expanded by 0.2% in Q1 following the steep decline of 0.9% in Q4 12.

However, recent downbeat key figures suggest that growth may very well turn negativeagain in Q2. Private consumption and exports remain weak and, therefore, we expect only

modest growth of around 0.25% in the Danish economy this year.

Sweden suffering in the furnace of non-direction

In a little over a month (2 July), the Riksbank executive board will convene to decide on

monetary policy and up until this week we had a hunch that the Riksbank might yield under

pressure from lower inflation expectations and outcomes and a discussion on much higher

unemployment than necessary had the Riksbank only done what was just. In addition, we

were foreseeing GDP growth much lower than the Riksbanks 1.5% y/y (wda).

This last argument failed spectacularly over the past week. Not only did growth come in

stronger than we expected, at 1.7% y/y it was even stronger than the Riksbank expected.

In particular, it was one component that managed to make us look a fool household

consumption of housing services (mainly heating). Overall, household consumption grew

a sturdy 1.5% y/y, instead of a measly 0.2% y/y as we had expected. Housing services

was 1.1pp of this deviation, explaining the lions share of our erroneous call. Other

components came in more or less as expected.

However, does this strong outcomeregardless of what excuse we may usemean that we

can rule out a July cut? Not at all. First and foremost, the composition of demand is

anything but benign and, second, other important outcomes still suggest a cut is on the

cards. To be frank, todays numbers only mean a scaling back of expectations of a July cut.

Given the significant outcome space, we still deem a 15-20bp probability of a cut fair.

New forecast for the Danish economy

0

0.5

1

1.5

2

2.5

13 14

%Government

Danish Economic Council

OECD

%

Source: Macrobond

GDP stronger but hollow

Source: Statistics Sweden. Danske Bank Markets

calculations

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Norway mixed signals

Since mainland growth got back on trend in Q1, there have been mixed signals about the

current state of the Norwegian economy. What has really fuelled speculation about

weaker growth is the rise in LFS unemployment to 3.7% in March. A fresh fall in retail

sales in April also indicates that the outlook for consumer spending is now much moreuncertain than just a couple of months ago. This is particularly important for financial

markets, as strong growth in consumer spending was singled out by Norges Bank at its

May rate-setting meeting as a reason not to cut interest rates further. On the other hand,

homebuilding has accelerated so far this year and commercial starts have picked up after

falling steadily since last summer. As much of the rise in unemployment seems to stem

from the construction sector, these are positive signals. It should also be added that

registered unemployment has fared far better than the LFS data would suggest. This

discrepancy could be a sign of mismatch problems in the Norwegian labour market.

Norwegian unemployment figures part

company


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Latest research from Danske Bank

31/ 5/13 ECB Preview: The end of monetary easing

The likelihood of a deposit rate cut at the upcoming ECB meeting is close to nil and the

chance that the ECB will move to negative rates at a later stage is very small.
http://danskeresearch.danskebank.com/link/FlashCommentECBpreview310513/$file/FlashComment_ECBpreview_310513.pdfhttp://danskeresearch.danskebank.com/link/FlashCommentECBpreview310513/$file/FlashComment_ECBpreview_310513.pdfhttp://danskeresearch.danskebank.com/link/FlashCommentECBpreview310513/$file/FlashComment_ECBpreview_310513.pdf

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Macroeconomic forecast

Macro forecast, Scandinavia

Denmark 2012 -0.5 0.6 0.2 2.2 -0.4 0.9 2.5 2.4 6.1 -4.0 45.8 5.92013 0.4 0.4 1.2 0.3 0.0 0.1 0.0 1.3 6.0 -1.4 40.7 4.12014 1.5 1.1 0.2 -0.5 0.0 3.2 1.6 1.9 6.0 -0.3 38.9 4.7

Sweden 2012 0.8 1.5 0.8 3.4 -1.1 0.7 -0.1 0.9 8.0 -0.6 37.7 7.02013 1.7 2.4 0.8 2.5 0.2 1.5 2.5 0.3 8.0 -1.0 37.6 6.92014 2.0 2.6 0.6 7.7 0.0 4.9 7.6 1.7 7.8 -0.8 37.5 6.1

Norway 2012 3.5 2.9 2.1 8.1 2.2 3.3 0.8 3.2 - - -2013 2.9 3.0 1.6 5.5 0.1 -1.6 4.2 1.6 3.1 - - -2014 3.2 3.6 2.0 4.6 0.0 1.4 3.8 2.0 3.0 - - -

Macro forecast, Euroland

Euroland 2012 -0.5 -1.2 -0.1 -3.9 -0.7 2.9 -0.9 2.5 11.4 -3.5 93.1 1.42013 -0.6 -0.7 -0.4 -4.5 -0.1 2.0 -0.2 1.7 12.1 -3.1 95.5 2.42014 1.0 0.1 -0.2 1.0 0.1 4.4 2.8 1.6 12.2 -2.9 95.8 2.5

Germany 2012 0.9 0.6 1.4 -4.9 0.0 4.3 2.2 2.0 6.9 0.1 82.4 6.32013 0.5 0.5 0.8 -1.2 0.0 2.6 2.5 1.8 6.7 -0.2 81.1 6.02014 2.3 1.4 0.9 4.9 0.0 4.8 4.5 2.0 6.5 0.0 79.0 5.6

France 2012 0.0 0.0 1.4 0.0 1.4 2.3 -0.3 2.1 10.2 -4.7 90.8 -1.92013 -0.4 0.2 0.6 -1.0 -0.4 1.8 1.1 1.7 11.2 -4.0 94.1 -1.62014 0.7 1.1 0.0 1.4 0.0 4.4 4.3 1.5 11.5 -4.2 96.4 -1.8

Italy 2012 -2.2 -4.2 -1.0 -9.2 -0.4 1.9 -7.4 3.0 10.6 -2.4 124.2 -0.72013 -1.5 -1.9 -0.5 -4.7 0.0 3.0 1.6 2.0 11.8 -2.4 128.6 0.62014 1.0 1.1 -0.4 2.0 0.0 4.0 4.1 1.7 11.5 -2.3 128.1 0.8

Spain 2012 -1.4 -2.2 -3.7 -8.7 0.5 3.1 -5.0 1.9 24.9 -6.7 88.4 -1.92013 -1.4 -2.8 -3.6 -7.8 0.0 5.8 -0.8 1.7 26.4 -5.5 96.0 1.02014 -0.6 -0.7 -2.0 -2.0 0.0 4.8 3.5 1.0 26.8 -5.2 102.0 2.5

Finland 2012 -0.2 1.6 0.8 -2.9 - -1.4 -3.7 2.8 7.7 -1.9 53.0 -1.72013 0.3 0.8 0.5 -2.0 - 1.2 0.8 2.0 8.3 -1.5 56.0 -1.02014 2.0 1.2 0.2 3.0 - 4.0 2.5 2.0 8.0 -1.0 57.0 -0.7

Macro forecast, Global

USA 2012 2.2 1.9 -1.7 8.7 0.1 3.4 2.4 2.1 8.1 -7.0 100.0 -3.02013 2.1 2.4 -2.4 6.9 0.0 3.3 2.6 1.6 7.6 -5.3 101.8 -3.12014 3.2 2.6 -0.8 10.7 0.2 7.4 7.4 1.6 6.8 -3.7 100.9 -3.2

Japan 2012 2.0 2.2 2.7 4.2 0.0 -0.1 5.5 -0.1 4.4 -7.9 229.7 1.02013 2.0 1.6 1.6 3.6 0.0 1.6 1.8 0.2 4.2 9.3 238.6 0.92014 1.4 0.5 0.6 1.0 0.0 7.5 3.5 2.1 4.1 -8.4 245.0 1.6

China 2012 7.8 - - - - - - 2.7 4.3 -1.3 22.2 2.32013 8.0 - - - - - - 2.7 4.3 -1.9 19.6 2.92014 8.2 - - - - - - 3.1 4.1 -1.7 17.2 3.4

UK 2012 0.0 0.8 2.7 -0.4 -0.3 -0.1 2.3 2.8 8.0 -5.2 90.5 -3.52013 0.6 0.6 0.3 1.5 -0.1 2.0 1.7 2.7 8.1 -6.2 93.5 -2.92014 1.4 0.9 -0.5 4.8 0.0 4.5 3.4 2.6 8.2 -5.2 96.2 -2.9

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-

ports1

Im-

ports1

Infla-

tion1

Unem-

ploym.3

Public

budget4

Current

acc.4

Public

debt4

Unem-

ploym.3

Public

budget4

Public

debt4

Year

Y ear GDP1

Private

cons.1

Public

cons.1

Fixed

inv.1

Stock

build.2

Current

acc.4

GDP1

Private

cons.1

Public

cons.1

Fixed

inv.1

Stock

build.2

Ex-

ports1

Im-

ports1

Infla-

tion1

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

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Weekly Focus

Financial forecastBond and money markets

Currency

vs USD

Currency

vs DKK

USD 31-May - 573.2

+3m - 574

+6m - 587

+12m - 587

EUR 31-May 130.1 745.5

+3m 130 746.0

+6m 127 746.0

+12m 127 746.0

JPY 31-May 100.4 5.71

+3m 103 5.57

+6m 106 5.57

+12m 110 5.33

GBP 31-May 152.1 872.0

+3m 151 867

+6m 144 848

+12m 149 878

CHF 31-May 95.4 600.9+3m 97 592

+6m 98 602

+12m 98 602

DKK 31-May 573.2 -

+3m 574 -

+6m 587 -

+12m 587 -

SEK 31-May 661.1 86.7

+3m 646 88.8

+6m 654 89.9

+12m 646 91.0

NOK 31-May 586.4 97.7

+3m 573 100.1

+6m 583 100.8

+12m 579 101.5

Regional

Price trend

12 mth.

Regional recommen-

dations

USA Corporate earnings surprise 5%-10% Underweight/Neutral

Emerging markets (USD) Uncertainty has hit Asia 5%-10% Neutral

Europe (ex. Nordics) (EUR) Weak economy, attractive valuation 5%-10% Neutral

Nordics Strong cyclical profile 5%-10% Overweight

Commodities

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013 2014

NYMEX WTI 94 93 93 91 90 90 90 90 93 90

ICE Brent 113 103 105 102 100 99 98 97 106 99

Copper 7,958 7,300 7,500 7,475 7,460 7,445 7,435 7,425 7,558 7,441

Zinc 2,054 1,900 1,950 1,935 1,925 1,915 1,905 1,895 1,960 1,910Nickel 17,376 15,000 16,000 15,700 15,500 15,300 15,100 14,900 16,019 15,200

Aluminium 2,041 1,900 1,925 1,895 1,870 1,845 1,825 1,805 1,940 1,836

Gold 1,631 1,425 1,375 1,325 1,275 1,225 1,200 1,175 1,439 1,219

Matif Mill Wheat 245 233 233 241 242 244 246 247 238 245

CBOT Wheat 737 700 705 710 715 720 725 730 713 723

CBOT Corn 715 600 605 610 615 620 625 630 632 623

CBOT Soybeans 1,449 1,425 1,435 1,445 1,455 1,465 1,475 1,485 1,438 1,470

Medium 0 to +5%

1,509

695

1.71

2.45

2.85

3.10

3.05

3.10

2.33

2.05

1.85

2.45

1.181.10

1.20

1.35

3.20

2.05

2.25

1.85

1.05

1.25

1.45

2.02

2.07

2.25

20142013

2.20

2.24

2.45

2.65

1.70

1.90

2.10

93

14,800

7,317

1,915

1,415

205

102

1,907

658

31-May

0 to +5%

0 to +5%

Medium

Medium

1.96

Currency

vs EUR2-yr swap yield

Risk profile

3 mth.

Medium 0 to +5%

Price trend

3 mth.

0.45

0.43

0.28

0.66

0.12

0.59

0.45

0.60

0.70

0.45

85.5

124.1

745.5

86.0

88.0

85.0

126

124

124

860.0

762.7

735

840

830

820

745

130.1

-

-

-

-

130.6

746

746

746

0.35

0.40

0.50

130

127

127

134

134

140

1.02

0.15

0.15

0.20

1.31

1.35

0.55

0.70

0.65

0.70

0.80

2.10

1.60

0.60

0.75

0.850.40

1.25

1.25

1.77

740

1.82

1.82

1.95

2.00

1.40

0.05

0.20

0.20

0.20

0.05

0.05

0.30

0.25

0.27

0.20

0.15

0.51

0.02

0.30

0.35

0.40

0.20

0.20

1.50

1.00

1.00

1.00

1.50

1.50

0.00

0.00

0.50

0.50

1.30

1.00

0.10

0.24

1.85

0.50

0.10

0.50

0.00

0.20

0.30

0.50

0.50

0.50

0.50

0.10

0.10

0.50

10-yr swap yield

1.20

0.20

0.20

0.30

3m interest rate

0.50

Average

Key int.

rate

0.25

0.25

0.25

0.25

1.50

0.00

0.50


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Weekly Focus

CalendarKey Data and Events in Week 23

Period Danske Bank Consensus Previous

- CNY NBS manufacturing PMI (released Saturday) Index May 50.0 49.9 50.6

- USD Fed's chairman Bernanke (voter, neutral) speaks at Princeton (Sunday)

- EUR EU-Russia summit

- USD Fed's Kocher lakota (non-voter, dove) speaks (Saturday)

- GBP Funding for lending statistics 1st quarter

1:50 JPY Capital spending y/y 1st quarter -5.5% -8.7%

3:30 AUD Retail sales m/m Apr -0.4%

3:45 CNY HSBC manufacturing PMI Index May 49.6 50.4

3:50 U SD Fed' s Yel len (voter, dove) speaks

8:30 SEK PMI Index May 50.5 49.6

9:00 NOK PMI Index May 48.9

9:15 ESP PMI manufacturing Index May 45.0 44.7

9:45 ITL PMI manufacturing Index May 46.1 45.8 45.5

9:50 FRF PMI manufacturing, final Index May 45.6 45.5 45.5

9:55 DEM PMI manufacturing, final Index May 49.1 49.0 49.0

10:00 EUR PMI manufacturing, final Index May 47.9 47.8 47.8

10:30 GBP PMI manufacturing Index May 50.1 49.8

11:00 DKK Danish PMI Index May 49.5

13:20 USD Fed's Willams (non-voter , dove) speaks

14:58 USD Markit manufacturing PMI, final May 52.0

16:00 USD Construction spending USD bn Apr 1.0% -1.7%

16:00 USD ISM manufacturing Index May 51.2 50.5 50.7

16:00 USD ISM prices paid Index May 49.5 50.0

23:00 USD Total Vehicle Sales m May 15.10 14.88

Tuesday, June 4, 2013 Period Danske Bank Consensus Previous1:50 JPY Monetary base y/y May 23.1%

3:30 JPY Labor cash earnings y/y Apr -0.9%

6:30 AUD Reserve Bank of Australia (cash rate target decision) % 2.75% 2.75%

9:30 SEK Service production m/m|y/y Apr |1.0% -0.9%|0.5%

10:30 GBP PMI construction Index May 49.6 49.4

11:00 EUR PPI m/m|y/y Apr -0.2%|0.2% -0.2%|0.7%

11:15 EUR ECB announces al lotment in 7-day (MRO)

14:30 USD Trade balance USD bn Apr -41.2 -38.8

16:00 DKK Currency reserves DKK bn May 491.7

16:00 DKK Change in currency reserves DKK bn May 9.8

19:30 U SD Fed' s Geor ge (voter , hawk) speaks

Monday, June 3, 2013


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Weekly Focus

Calendar - continued

Wednesday, June 5, 2013 Period Danske Bank Consensus Previous

2:00 USD Fed's F isher (non-voter, hawk) speaks

3:30 AUD GDP q/q|y/y 1st quarter 0.6%|3.1%

3:45 CNY HSBC service PMI Index May 51.1

8:30 SEK PMI services Index May 49.0 48.6

9:15 ESP PMI services Index May 44.6 44.4

9:45 ITL PMI services Index May 47.4 47.5 47.0

9:50 FRF PMI services, final Index May 44.4 44.3 44.3

9:55 DEM PMI services, final Index May 49.4 49.8 49.8

10:00 EUR PMI services, final Index May 47.6 47.5 47.5

10:00 EUR PMI composite, final Index May 47.8 47.7 47.7

10:30 GBP PMI services Index May 53.2 52.9

11:00 EUR ECB announces al lotment in 7-day (USD)

11:00 EUR GDP, second release q/q|y/y 1st quarter -0.2%| -0.2%|-1.0% -0.2%|-1.0%

11:00 EUR Retail sales m/m|y/y Apr 0.1%| -0.2%|-0.6% -0.1%|-2.4%

13:00 USD MBA Mortgage Applications

14:15 USD ADP employment 1000 May 170 119

14:30 USD Unit labour cost, final q/q 1st quarter 0.5% 0.5%

16:00 USD Factory Orders m/m Apr 1.4% -4.0%

16:00 USD ISM (NAPM) non-manufacturing Index May 54.0 53.5 53.1

20:00 USD Beige Book

Thursday, June 6, 2013 Period Danske Bank Consensus Previous

1:50 JPY Purchase of foreign stocks JPY bn -1117.3

3:30 AUD Trade balance AUD m. Apr 307

7:30 FRF Unemployment % 1st quarter 10.5 10.6%

9:00 DKK House price index m/m|y/y Mar 1.8%|1.5%

9:15 CHF CPI m/m|y/y May -0.1%|-0.4%

12:00 DEM Factory orders m/m|y/y Apr -0.5%| -1.3%|0.2% 2.2%|-0.4%

13:00 GBP BoE rate announcement % 0.50% 0.50% 0.50%

13:00 GBP BoE announces asset purchase target GBP bn 375 375 375

13:45 EUR ECB announces refi rate % 0.50% 0.50% 0.50%

13:45 EUR ECB announces deposit rate % 0.00% 0.00% 0.00%

14:00 USD Fed's Plosser (non-voter, hawk) speaks

14:30 USD Initial jobless claims 1000 345 354

14:30 EUR ECB press conference


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Weekly Focus

Calendar - continued

Friday, June 7, 2013 Period Danske Bank Consensus Previous

- CNY Chi nese presi dent Xi and U.S. pr esi dent Obama meets

7:00 DKK CB's securities statistics Apr

7:00 DKK Foreign portfolio investments Apr

7:00 JPY Leading economic index, preliminary Index Apr 98.6 97.9

8:00 DEM Trade balance EUR bn Apr 17.0 18.8

8:00 DEM Current account EUR bn Apr 13.0 20.2

9:00 DKK Industrial production m/m Apr 0.0% 0.7%

9:00 DKK Bankruptcies (s.a.) Number May 331

9:00 DKK Forced sales (s.a.) Number May 402

10:00 NOK Industrial production m/m|y/y Apr 1.0%|-8.6%

10:00 NOK Manufacturing Production m/m|y/y Apr -0.7%|3.2%

10:30 GBP Trade balance GBP bn Apr -3000 -3130

12:00 DEM Industrial production mm/|y/y Apr -0.3%| 0.0%|-0.8% 1.2%|-2.5%

12:00 EUR ECB announces 3-year LTRO repayment

14:30 USD Nonfarm payroll 1000 May 190 168 165

14:30 USD Private payroll 1000 May 190 175 176

14:30 USD Manufacturing payroll 1000 May 0 3 0

14:30 USD Unemployment rate % May 7.5% 7.5% 7.5%

14:30 USD Average hourly earnings, non-farm m/m|y/y May 0.2%| 0.2%|1.9%

14:30 USD Average Weekly Hours Hours May 34.5 34.4

14:30 CAD Net change in employment 1000 May 18.0 12.5

During the week Period Danske Bank Consensus Previous

Mon 03 - 07 GBP Halifax house prices m/m|3Ms/YoY May 0.3%|2.5% 1.1%|2.0%

Sat 08 CNY Trade balance USD bn May 21.45 18.16

Sat 08 CNY Exports y/y May 7.0% 14.7%

Sat 08 CNY Imports y/y May 6.0% 16.8%

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

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


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Weekly Focus

DisclosureThis research report has been prepared by Danske Reseach, a division of Danske Bank A/S ("Danske Bank"). The

authors of the research report are Allan von Mehren, Chief Analyst and Steen Bocian, Chief Economist.

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Weekly Focus

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