Investment Research — General Market Conditions

19 July 2010

Danske Daily
Markets overnight
US stocks fell on Friday and Asian markets are mixed this morning. Risky assets came
Market movers today:
under pressure on Friday as US consumer confidence disappointed (U. of Michigan
confidence down to 66.5 from 76.0 in June) and the positive earnings surprises lost EUR: Current account (10:00 CET)
momentum. The S&P500 gave up 2.9% with financials seeing the biggest losses. Asian
HUF: Interest rate meeting –
markets have shown mixed performance overnight with several of the main indices trading
unchanged expected (14:00 CET)
in red, but the Chinese markets higher – Japan is closed.
USD: NAHB Housing Market Index
EU and IMF pull out of Hungary loan talks. Negotiators from EU and IMF withdrew
(16:00 CET)
from talks with Hungary over the weekend saying that the country would not, for now at
least, have access to the remaining funds in the EUR20bn loan package that was provided Q2 earnings (incl. IBM and Texas
in 2008. The move is a signal from the EU and IMF that adherence to the strict budget plan Instruments)
remains a prerequisite for achieving funding and is rather bad news considering not least
how fragile the Hungarian (and global) markets are at the moment (see EMEA Daily).
EUR/HUF is almost 3% higher since Friday. Market overview
07:30 1 day +/-,%
US treasuries continue their strong run and have now almost fully reversed their early
July losses. The 2-year yield is trading at 0.59% and the 10-year yield has corrected well S&P500 (clo se) 1064.9  -2.88
S&P500 fut (chng fro m clo se) 1064.5  0.13
back below 3.00% - potentially eyeing a test of its 1 July 2.88% low. Nikkei 9408.4  -2.86
Hang Seng 20052.4  -0.98
JPY is stronger, Scandies weaker. Deteriorating risk sentiment and lower US yields have
17:00 07:30 +/-, bp
seen USD/JPY move sharply lower over recent weeks to test the 86 level. The strong JPY
is fuelling renewed speculation about the potential for interventions by the Bank of Japan. US 2y gov 0.58 0.59  0.8
US 10y gov 2.94 2.94  -0.2
Profit-taking in the Scandies has helped reverse the positive trend and sent EUR/SEK back
above 9.50 and EUR/NOK back above 8.10. iTraxx Europe (IG) 113 118  5.6
iTraxx Xover (Non IG) 452 536  83.8

+/-, %
Global Daily EUR/USD 1.294 1.290  -0.32
USD/JPY 86.450 86.690  0.28
The calendar is very light today with the eurozone May current account and the US EUR/CHF 1.36 1.35  -0.69
NAHB housing market index (where we look for an unchanged reading) as the main EUR/GBP 0.844 0.843  -0.21
EUR/SEK 9.495 9.521  0.28
events. The eurozone current account is of particular interest, as it will offer more insight EUR/NOK 8.10 8.14  0.54
into the drivers of the significant EUR sell-off during May – not least to what degree this
USD
was driven by a larger shift in portfolio flows.
Oil Brent, USD 75.3 75.3  0.08
Focus remains on Q2 earnings with among others IBM and Texan Instruments reporting Gold, USD 1192.4 1192.4  0.00
today. So far 80 percent of the S&P500 companies that have reported have presented Note:
* The iTraxx Europe Index show the spread development
better-than-expected earnings. for the most liquid investment grade CDS contracts in
Plenty on the calendar this week with Fed Chairman Bernanke’s semi-annual monetary the euro credit market.
policy testimony Wednesday and Thursday and the release of European bank stress test
**The iTraxx Europe Crossover show the spread
results on Friday expected to draw most attention. In addition, the Bank of Canada is development of the most liquid non-investment grade
expected to hike rates on Tuesday, European July PMIs are released on Thursday, and UK CDS contracts in the euro credit market.
Q2 GDP numbers on Friday. Source: Bloomberg
Short-term EUR/USD risks becoming more two-sided as most of the short EUR
positions are unwound (according to IMM data) and the EUR risk premium reduced (last
week’s successful Spanish auction one indication of this).
From 12-30 July Danske Daily will be
published in a reduced summer edition
Scandi Daily
No key data out of Scandinavia today with Norwegian existing home prices as the only
scheduled release. Only other data release this week, apart from earnings reports, is Danish
consumer confidence scheduled for Thursday. Senior Analyst
Kasper Kirkegaard
+45 45 13 70 18
kaki@danskebank.com

www.danskeresearch.com
Danske Daily

Key figures and events

Monday, July 19, 2010 Period Danske Bank Consensus Previous
- OTH Earnings - IBM, Texas Instruments
1:01 GBP Rightmove House Prices m/m|y/y Jul 0.3%|5.0%
10:00 EUR Current Account EUR bn May -5.1
16:00 USD NAHB Housing Market Index Index Jul 17 16 17

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Danske Daily

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