Daily Comment Raiffeisen RESEARCH

12 July 2011

Chart of the day

Hourly QTYc1
Price USD 20:00 10.07.2011 - 05:00 12.07.2011 (CHG) Cndl; QTYc1; Last Trade 01:00 12.07.2011; 124 ; 124 +; 124 +; 124 61,8% 124 30/32+ 2MA; QTYc1; Last Trade(Last); 13; 144; Simple; 01:00 12.07.2011; 124 +; 122 + Cndl; QTYc1; Last Trade 01:00 12.07.2011; 124 ; 124 +; 124 +; 124 Cndl; QTYc1; Last Trade 01:00 12.07.2011; 124 ; 124 +; 124 +; 124 2MA; QTYc1; Last Trade(Last); 13; 144; Simple; 01:00 12.07.2011; 124 +; 122 + Cndl; QTYc1; Last Trade 01:00 12.07.2011; 124 ; 124 +; 124 +; 124 38,2% 124 31/32+ + Price USD

Important indicators today

RBI consensus 3.9% 2.1% 9.3% 13.1% last 3.9% 2.0% 9.7% 13.3%
12428/32 12425/32 12422/32 12419/32

12431/32 12428/32 12425/32 12422/32 12419/32

38,2% 124 17/32+

12416/32 12413/32 12410/32 1247/32 1244/32 1241/32

1/32 20:00 21:00 22:00 23:00 00:00 01:00 02:00 03:00 04:00 05:00 06:00 07:00 08:00 09:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 18:00 19:00 20:00 21:00 22:00 23:00 00:00 01:00 02:00 03:00 04:00 05:00

10 Juli 2011

Source: Thomson Reuters, Raiffeisen RESEARCH

T-Note Future

Last: 124-22 Buy 124 -27 Target: 124 -31 125-2 Bullish Flag confirms a new rally, stop 124 -17 -> 124-9. July 12h, 2011 07:50CET

Market overview
cur.
Interest rates, yields 3M Euribor EUR 3M Libor USD Bund Future EUR US T Note Future Currencies EUR/USD EUR/JPY EUR/CHF EUR/CZK EUR/HUF EUR/PLN Equity markets S&P 500 Dow Jones I. A. Nasdaq Comp. DJ EuroStoxx 50 DAX ATX Nikkei 225 Emerging Markets Hang Seng (China) Sensex (India) Bovespa (Brazil) JALSH (South Africa) Commodities Brent Oil USD/bbl Gold USD/oz Credit markets iTRAXX Europe ITRAXX Crossover iTRAXX Fin. Senior 5J CDS Greece. 5J CDS Spain 5J CDS Portugal 110 417 181 8 BP 26 BP 14 BP 120 541 210 2433 301 1074 94 352 107 661 121 184 14 BP 13 BP 8 BP 1263 BP -1 BP 650 BP 117 1551 -0.6% 0.4% 126 1578 78 1157 22.5% 9.8% 12221 18555 60224 31845 -2.2% 14219 -0.9% 21109 -2.1% 73103 -0.5% 33335 11273 17296 60098 26432 -3.7% -9.5% -13.1% -0.9% 1319 12506 2803 2709 7230 2672 9926 -1.8% 1371 1040 9937 2099 2560 5834 2281 8228 4.9% 8.0% 5.6% -3.0% 4.6% -8.0% -3.0% 1.396 111.800 1.171 24.237 268.160 4.007 0.5% -0.7% -0.1% 0.0% 0.2% 0.2% 1.49 123.3 1.4 25.9 292.1 4.15 1.25 105.4 1.2 23.9 261.9 3.83 -4.3% 3.0% -6.8% -3.2% -3.9% 1.1% 1.60% 0.8 BP 0.25% 0.0 BP 129.14 124.72 1.3% 0.1% 1.6% 0.5% 134.8 125.0 0.8% 0.2% 119.9 115.1 59.5 BP -5.7 BP 3.1% 5.6%

Prices as of 12 July 11, 8:01 a.m. (CET) Source: Bloomberg

23/22

23/22

23/22

23/22

23/12

23/12

23/12

23/12

23/03

23/03

23/52

23/52

23/52

23/52

23/42

Europe
09:00 09:00 13 Jul 13 Jul HU: CPI, yoy PL: CPI, yoy CN: Real GDP, yoy CN: Industrial Production, yoy Euro/EU-finance ministers meet in Brussels Fed releases FOMC-minutes Jun Jul Q2 Jun. 3.9% 1.9%

23/42

23/42

23/42

23/71

23/71

Emerging Markets

12416/32 12413/32 12410/32 1247/32 1244/32 1241/32

1/32

Events
~ 20:00

11 Juli 2011

12 Juli 2011

Source: Bloomberg, Raiffeisen RESEARCH

1T 52W H

52W L

Ytd

-1.2% 12876 -2.0% -2.9% -2.3% -2.6% 2888 3077 7600 3013

-1.4% 10892

Established markets: Yesterday, the euro debt crisis once again determined market trends, with sentiment regarding Italy becoming more negative. Yields on 10-year Italian government bonds increased by 45 basis points to 5.70%. This was the largest increase over one day since the start of the eurozone. Fears of the debt crisis spreading to Italy didnt just put considerable pressure on the euro, which slipped to below EUR/USD 1.40. The flight to safe investments also led to a nosedive in yields on German government bonds: 2-year bonds are currently yielding only 1.25%; 10-year German sovereign bonds are at 2.70%, which is as low as at the end of November 2010. In reaction to the increasing contagion effect to the large peripheral countries, the EU finance ministers yesterday considered extending the scope and flexibility of the EU rescue mechanism (EFSF). This announcement may make bond buybacks with the support of the EFSF possible, a measure which had previously been blocked by Germany. Moreover, EU financial assistance should in future be offered at lower interest rates and for longer maturities. The only relevant data due out today are the minutes of the last FOMC meeting, which will not be published until this evening. As a result, the focus will remain on the euro debt crisis. We do not expect any significant new decisions to be reached at the ongoing meeting of EU finance ministers today. Therefore, sentiment on Italy could further deteriorate, at least until more details are announced regarding the new competencies of the EFSF. Equity markets: Budget problems in the United States and the next chapter being written in the euro crisis also dragged down US equities indices yesterday evening, with the Dow Jones Industrials losing 1.2%, the S&P 500 1.8% and the Nasdaq Composite 2.0%. Financials (Citigroup down 5.3%), technology and automotives (Ford Motor down 4.0%) were amongst the stocks the most severely hit. On the other hand, defensive stocks held steady with only slight losses (McDonalds down 0.29%). After the close of trading, Alcoa was at least able to lift spirits on news of satisfactory profits thanks to high aluminium prices, thus marking a successful start to the second-quarter reporting season. In the wake of the US bourses, the Japanese equities market also sustained losses this

2337 160 BP 277 1072 32 BP 96 BP

Daily Comment

morning, with the Nikkei 225 index down around 1.4% one hour before the close of trading. Here as well, financials in particular bore the brunt. The shortterm downward trend also looks set to continue in the European bourses this morning. As no major economic or company data is due out today, the markets will continue to take their cues from the debt problems engulfing part of the euro zone in todays trading. Credit markets: The credit market got off to a very weak start this week. Most of the pressure landed on names in the peripheral nations. Whether Enel (Italy), Iberdrola (Spain) or Portugal Telecom, NonFinancials were hardly spared greater spreads. Banks and Insurances in these regions also posted some eyebrow-raising spreads. The 5-year CDS of Italian issuers widened especially: Generali, Banca Monte dei Paschi, Banco Popolare and Intesa Sanpaolo. Since yesterday, these have been at all-time record highs and trading above the levels where Lehman Brothers went insolvent. Though hard to believe, new issues are most readily expected on the high-yield market. Names like Numericable, Coditel, Spie, Ineos and TDF are being handled as potential issuers. Emerging Markets: Chinese lending beat forecasts in June, totalling CNY 633.9 billion after the CNY 551.6 billion in May. M2 money supply also rose more strongly than anticipated, by 15.9% yoy. Accompanied by a strongly increasing inflation rate, these figures raise expectations of more restrictive monetary policy, whether this be a hike in the interest rate or minimum reserve rate. Eyes will be on the GDP for the second quarter early tomorrow. Surprisingly, industrial production slowed down to 5.6% p.a. in India in May. CEE: The heightened risk aversion also impacted negatively on CEE assets: yesterday 10-year CE-3 yields increased by 20-30bp. Currencies displayed marked regional differences: the forint, leu and zloty tended to weaken against the euro with the forint and zloty even dropping to a painful low against the Swiss franc. By contrast, the Russian rouble remained unchanged against the currency basket (with strong gains against the euro). This pattern could well continue into the coming days. On the data front today and tomorrow see the release of the CE consumer prices for June, with inflation rates already stabilising (Hungary) or easing slightly (Czech Republik) following the heightened price pressures in spring. The Polish inflation rate to be published tomorrow should show a decline from 5% yoy in May to 4.8% p.a. in June.

Market overview
current
Other interest rates EUR Eonia 1M Euribor EUR 3M Euribor EUR 6M Euribor EUR 12M Euribor EUR 2Y Swap EUR 3Y Swap EUR 5Y Swap EUR 10Y Swap EUR Other currencies EUR/GBP EUR/HRK EUR/RON EUR/SEK EUR/RUB EUR/UAH EUR/TRY EUR/BRL EUR/CNY EUR/ZAR Bond market 2Y Bund EUR 5Y Bund EUR 10Y Bund EUR 2Y US Treasury 5Y US Treasury 10Y US Treasury Interest rates CEE 3M Pribor 3M Wibor 3M Bubor 10Y Czech Rep. 10Y Poland 10Y Hungary Equity markets CEE Turkey (ISE Nat. 100) Croatia (CROBEX) Poland (WIG20) Romania (BET) Russia (MICEX) Serbia (BELEX15) Czech Rep. (PX) Hungary (BUX) Commodities WTI Oil USD/bbl Fuel oil USD/mt Diesel USD/mt CO2 EUA Fut. EUR/mt Silver USD/oz Platinum USD/oz Palladium USD/oz Steel USD/mt Aluminium USD/mt Copper USD/mt 0.60% 1.43%

1T 52W H 52W L
0.8 BP 2.8 BP 1.7% 1.4% 1.6% 1.8% 2.2% 2.5% 2.8% 3.2% 3.8% 0.9 7.5 4.3 9.6 43.9 11.9 2.4 2.4 9.7 10.0 1.9% 2.8% 3.5% 0.8% 2.4% 3.7% 0.9% 4.6% 6.1% 4.2% 6.4% 8.4% 0.3% 0.6% 0.8% 1.1% 1.4% 1.1% 1.4% 1.6% 2.3% 0.8 7.2 4.1 8.7 38.6 9.9 1.9 2.2 8.5 8.7 0.6% 1.2% 2.1% 0.3% 1.0% 2.4% 0.8% 3.7% 5.3% 3.2% 5.3% 6.6%

Ytd
-21.7 BP 65.1 BP 59.5 60.4 68.8 40.9 23.9 2.4 -24.3 BP BP BP BP BP BP BP

1.60% 0.8 BP 1.83% 0.0 BP 2.20% -0.6 BP 1.96% -10.5 BP 2.13% -10.4 BP 2.52% -8.4 BP 3.13% -7.6 BP 0.880 7.397 4.253 9.221 39.548 11.151 2.303 2.213 9.033 9.586 1.25% 1.81% 2.65% 0.36% 1.45% 2.89% 0.8 4.6 6.1 3.9 5.9 7.3 62909 2221 2743 5527 1701 726 1202 21816 94.6 960.8 987.0 11.8 35.8 1720.2 766.8 610.0 2481.0 9570.0 -0.2% 0.0% 0.0% 0.1% -0.2% -0.6% -0.3% -0.7% -1.2% -0.1% -1.4 -3.1 -2.3 0.8 -2.5 -2.9 0.0 0.5 0.0 1.1 -1.0 5.0 BP BP BP BP BP BP BP BP BP BP BP BP

2.6% 0.2% -0.7% 2.5% -3.2% 5.9% 10.3% -0.4% 2.3% 7.4% 38.2 -3.1 -31.4 -23.0 -56.0 -40.4 -5 75 25 -1 -21 -69 BP BP BP BP BP BP BP BP BP BP BP BP

-1.1% -0.6% -1.8% -1.2% 0.0% -0.2% -1.4% -2.2%

71777 56658 2338 1773 2942 2327 6099 4694 1865 1320 829 600 1278 1107 24531 20147

-4.7% 5.2% 0.0% 4.9% 0.8% 11.4% -1.8% 2.3% 0.4% 26.0% 24.9% -11.2% 16.5% -1.0% -3.3% 11.3% 0.4% -0.3%

-0.6% 115.5 76.6 0.2% 1064.5 614.5 -0.7% n.a. n.a. -4.8% 15.8 13.2 -1.6% 49.8 17.3 -0.3% 1886.5 1489.0 -0.3% 862.3 435.8 2.5% 576.0 450.0 0.1% 2803.0 1947.5 0.0% 10190.0 6470.0

Prices as of 12 July 11, 8:01 a.m. (CET) Source: Bloomberg

Daily Comment
This report was completed on 12 July 2011

Acknowledgements

Editor
Raiffeisen RESEARCH GmbH A-1030 Vienna, Am Stadtpark 9 Tel: +43 1 717 07-1521 Head: Peter Brezinschek (1517) Research Sales: Werner Weingraber (5975) Economics, Fixed Income, FX: Valentin Hofsttter (Head, 1685), Jrg Angel (1687), Wolfgang Ernst (1500), Gunter Deuber (5707), Ingo Jungwirth (2139), Julia Neudorfer (5842), Andreas Schwabe (1389), Gintaras Shlizhyus (1343), Gottfried Steindl (1523), Martin Stelzeneder (1614) Credit/Corporate Bonds: Christoph Klaper (Head, 1652), Christoph Ibser (5913), Igor Kovacic (6732), Martin Kutny (2013), Peter Onofrej (2049), Gleb Shpilevoy (1461), Alexander Sklemin (1212), Jrgen Walter (5932) Stocks: Helge Rechberger (Head, 1533), Aaron Alber (1513), Christian Hinterwallner (1633), Jrn Lange (5934), Hannes Loacker (1885), Richard Malzer (5935), Johannes Mattner (1463), Christine Nowak (1625), Leopold Salcher (2176), Andreas Schiller (1358), Connie Schmann (2178), Magdalena Wasowicz (2169) Quant Research/Emerging Markets: Veronika Lammer (Head, 3741), Mario Annau (1355), Lydia Kranner (1609), Nina Kukic (1635), Albert Moik (1593), Manuel Schuster (1529) Technical analysis: Stefan Memmer (1421), Robert Schittler (1537)

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