Investment Research — General Market Conditions

21 July 2010

Danske Daily
Markets overnight
Financial markets yesterday shrugged off the bigger-than-expected decline in
Market movers today:
housing starts June. The markets took some comfort in stronger building permits
and while there are signs of renewed weakness in the housing market this is mainly Minutes from Bank of England
due to the expiry of the first-time-homebuyer credit in April and hence the weakness monetary policy committee
is likely to prove temporary. Q2 earnings reports were mixed yesterday, with meeting (10:30 CET)
Goldman Sachs disappointing slightly and Apple reporting better-than-expected
Fed Chairman Bernanke gives
earnings after market close.
semi-annual report to the Senate
Bank of Canada (BoC) yesterday hiked rates by 25bp to 0.75%. However, the (16:00 CET)
accompanying statement was quite soft, cutting down growth forecasts. Thereby, the
Q2 earnings (incl. Fiat, Morgan
BoC has joined the Riksbank, Norges Bank and the RBA by hiking, while at the same
Stanley and Wells Fargo)
time signalling that rates will not move up too quickly from their current level.
US stocks recovered in late trade but risk sentiment has again deteriorated
slightly in Asian trade. S&P500 yesterday closed up 1.2%, but Asian stock markets Market overview
this morning are mixed with Nikkei up 0.1% and Hang Seng up 0.6%. 07:30 1 day +/-,%

US bond yield increased slightly since market close in Europe yesterday on the back S&P500 (clo se) 1083,5  1,14
S&P500 fut (chng fro m clo se) 1076,7  -0,32
of the recovery in the US stock market in late trade. 2-year and 10-year bond yields Nikkei 9285,5  -0,16
are both up by about 2bp since market close to 0.59% and 2.95% respectively. Hang Seng 20375,5  0,55

In the FX market EUR yesterday gave up some of its recent gains. USD/EUR this 17:00 07:30 +/-, bp

morning is trading 1.289 which is broadly unchanged since market close in Europe. In US 2y gov 0,58 0,58  0,0
Scandinavian currencies both SEK and NOK have strengthened against EUR US 10y gov 2,93 2,95  1,4

overnight. iTraxx Europe (IG) 116 121  4,5

iTraxx Xover (Non IG) 535 538  2,5

Global Daily EUR/USD 1,290 1,288 

+/-, %
-0,18
USD/JPY 87,190 87,170 -0,02
Market focus today will mainly be on Fed Chairman Ben Bernanke’s semi-annual EUR/CHF 1,35 1,36

 0,49
testimony before the Senate. Minutes from recent FOMC meetings suggest that Fed EUR/GBP 0,845 0,843  -0,28
EUR/SEK 9,510 9,475  -0,37
internal discussions have gradually shifted from unwinding strategies to discussions EUR/NOK 8,12 8,04  -0,97
on how to ease monetary policy further if needed. Hence, focus will be on how far
Bernanke believe we are from a situation where further stimulus is needed and not USD
Oil Brent, USD 76,1 76,2  0,07
least how Fed will ease. However, it should be remembered that the Fed Chairman’s Gold, USD 1193,0 1189,3  -0,31
testimony is usually not used to deliver major new messages on monetary policy. Note:
* The iTraxx Europe Index show the spread development
Bank of England (BOE) will today publish minutes from its July 8 monetary for the most liquid investment grade CDS contracts in
the euro credit market.
policy committee meeting. It will be interesting to see if bias in BOE’s internal
discussions is also gradually turning towards neutral or even easing. In the UK **The iTraxx Europe Crossover show the spread
discussions are complicated by inflation significantly above target and if anything development of the most liquid non-investment grade
CDS contracts in the euro credit market.
there was a slight tightening bias at the previous meeting with one member voting for
Source: Bloomberg
a rate hike. If there are signs that BoE is moving away from tightening bias it could
weigh on GBP.
From 12-30 July Danske Daily will be
published in a reduced summer edition
Scandi Daily
No key data out of Scandinavia today apart from earnings (incl. Nordea).
Senior Analyst
Flemming J. Nielsen
+45 45 12 85 35
flemm@danskebank.com

www.danskeresearch.com
Danske Daily

Key figures and events

Wednesday, July 21, 2010 Period Danske Bank Consensus Previous
- JPY Cabinet Office Monthly Economic Report
- OTH Earnings - Fiat, Morgan Stanley, Wells Fargo
10:30 GBP Minutes from MPC meeting Jul
13:00 USD MBA Mortgage applications -2.9%
16:00 USD Fed's Bernanke (voter, neutral) Gives semiannual report to Senate

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Danske Daily

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