Important disclosures and certifications are contained from page 15 of this report. www.danskeresearch.com

Investment Research — General Market Conditions

Market movers ahead

Focus remains on monetary policy across the Scandinavian countries. In Sweden on

Thursday the Riksbank cut the repo rate and introduced a QE programme. In Norway,

we still expect Norges Bank to ease further in March. In Denmark, the appreciation

pressure on the Danish krone is still a major theme.

The minutes from the FOMC’s January meeting will likely shed light on why the

FOMC chose to refer to ‘International developments’ in its statement.

The talks on Greece continue at the regular Eurogroup meeting on Monday.

In the UK, we expect CPI inflation for January and the unemployment rate for

December to come out at 0.3% and 5.8%, respectively. Minutes from the MPC’s

February meeting may also attract some attention.

In Japan, we expect the economy to have recovered strongly in Q4.

We expect Swedish CPI and CPIF inflation rates to come out at -0.3% y/y and 0.5%,

respectively.

Global macro and market themes

Strong labour market report clears way for Fed hike as soon as June.

Market pricing of Fed actions is still too complacent – we expect the USD and

treasury yields to go higher.

Aggressive easing across Europe – we expect it to underpin low bond yields in Europe.

Euro area and Japan appear to be recovering.

Bank of Japan unlikely to join easing party next week, in our view.

Strong private consumption in G3 underscores that deflation has so far not been

destructive.

Focus

Flash Comment: Euro area recovery gains momentum, 13 February.

Swedish repo rate in negative territory Euro PMIs expected to increase

Source: Macrobond Financial, Riksbank, Danske Bank Source: Eurostat, Markit Economics

13 February 2015

Editors Allan von Mehren +45 4512 8055 alvo@danskebank.dk Steen Bocian +45 45 12 85 31 steen.bocian@danskebank.dk

Weekly Focus

Scandinavian central banks are in the spotlight

Contents

Market movers ...................................................... 2

Global macro and market Themes ........... 6

Scandi Update ........................................................ 9

Latest research from Danske Bank

Markets .................................................................... 11

Macroeconomic forecast ............................ 12

Financial forecast .............................................. 13

Calendar .................................................................. 14

Financial views

Source: Danske Bank

Major indices

13-Feb 3M 12M

10yr EUR swap 0.69 0.80 1.00

EUR/USD 114 112 112

ICE Brent oil 60 70 84

13-Feb 6M 12-24M

S&P500 2088 0-5% 5-8%

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Market movers

Global

The main US event in the coming week will be the release of the January FOMC

meeting minutes on Wednesday. There has been a lot of speculation on why the FOMC

chose to include a reference to ‘international developments’ in its statement (see Flash

Comment: FOMC meeting - more patience, 28 January) and we believe the minutes are

likely to give us some answers. We are also looking forward to Fed Chairman Janet

Yellen’s semi-annual testimony on 24 February but more on that next week.

We are due lots of housing data this week and, in general, we expect the gradual

improvement in the housing market to continue this year, with a pickup in the pace of

construction activity. The week kicks off with the NAHB for February, which we

expect to stay virtually unchanged. We expect February housing starts to surprise on

the upside, with an increase of 0.6% m/m and building permits to jump 1.0% m/m.

Finally, the preliminary Markit PMI for February and the regional Philly Fed index

will give us a feel of how the manufacturing sector is coping with the stronger USD.

For January, we expect manufacturing production growth to show a solid increase of

0.4% m/m, thereby extending the upward trend in growth.

In the euro area, talks on Greece’s current and future co-operation with the EU continue

at the regular euro group meeting on Monday. Last week, there were no real conclusions

at the extra euro group meeting and the two sides even failed to agree on a way to take

negotiations forward but today Greece started talks with its euro area partners in a bid to

find common ground. This should also reflect that the agreement stalled on wording not

substance, according to a Greek government official. In our view, this also reflects that

the rhetoric will be harsh until it is absolutely necessary to reach an agreement.

In terms of data releases, we expect euro services PMI to increase above 53 for the

first time since August 2014. The increase should reflect that the services sector

benefits from the boost to consumers’ purchasing power due to the lower oil price.

Added to this, the January flash estimate was revised up by 0.4 points, which could

reflect progress during the month. The manufacturing PMI is also expected to

increase for a third month in a row, supported by the fading headwind from the

weaker euro and a general improvement in business sentiment.

In Germany, there have been positive changes in survey data since late 2014 and

across the board ZEW, IFO and PMIs suggest a pickup in activity for 2015. In the

coming week, we believe this should continue and we expect the ZEW expectation to

increase from 48.4 to 64.0. This is a large increase but, if we look solely looking at

the Sentix expectation, which is good leading indicator, there seems to be upside risk.

We also expect consumer confidence to continue strengthening in February. In January,

consumers reported a marked improvement in expectations on future unemployment

and the overall economic situation. Looking ahead, we see room for further

improvement as consumers’ purchasing power has increased due to the oil price decline.

We are also due to get the first release of the ECB accounts from the 22 January

meeting on Thursday. Based on Mario Draghi’s comments during the press

conference, it will contain information about whether the decisions were unanimous,

based on majority or consensus. We do not expect names to be mentioned in relation

to this. As the decision was described during the press conference, it should not bring

much new information but it is likely to cast some more light on the QE discussion.

We expect the gradual increase in

housing activity to continue

Source: Macrobond Financial

Euro PMIs expected to increase

Source: Macrobond Financial

Sentix suggests large jump in ZEW

Source: Macrobond Financial

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In the UK, there are many important releases next week. Minutes from the February

Monetary Policy Committee meeting are scheduled for release on Wednesday. As the

February Inflation Report released this week was overall hawkish compared with the

November report, this suggests that a rate hike in 2015 is still very likely (see Flash

Comment – UK: Bank of England inflation report supports the case for rate hike in

2015, 12 February.

The release of CPI inflation in January is also likely to attract attention. In December,

inflation declined to 0.5% y/y and we expect the January reading to decline further, down

to 0.3 %, which will be a new record low. Average weekly fuel prices declined by 16.6%

from December to January, indicating that fuel prices alone will pull down the inflation

rate by approximately 0.2 percentage points. Some of the British gas companies have

announced energy price cuts, which could also pull down inflation somewhat.

There is also news to come from the labour market, as February labour market statistics

are due for release. Although we expect unemployment to continue declining, we expect

the ILO unemployment rate (3M) to stay unchanged at 5.8%. Remember to keep an eye

on the weekly earnings figures, which have been rising in recent months. In our view,

future wage growth will be a key determinant of when the MPC hikes. If wage growth

picks up further in coming months, it could lead to higher core inflation and thereby

increase the likelihood of a hike. The combination of higher wage growth and low

inflation implies that real wage growth is positive, which is supporting growth in the UK.

Retail sales for January are also due for release next week.

In China, the important Chinese New Year public holiday starts on 18 February and

most Chinese will be off for a week. Hence, the week ahead will be very quite. The

only notable release scheduled is official house prices for January. Preliminary data

for January released by the real estate agency Soufun showed the first month-on-

month increase since mid-2014. Hence, it appears that the stabilisation in the housing

market evident in late 2014 has continued in early 2015.

In Japan, the main event next week is the Bank of Japan (BoJ) meeting on

Wednesday and the release of Q4 GDP on Thursday. We expect the meeting to be

relatively uncontroversial, in the sense that the BoJ is unlikely to announce any new

easing measures in connection with the meeting. It has already communicated that it

will ignore the short-term downward pressure on inflation from lower oil prices as

long as the economy continues to recover and inflation expectations do not decline

substantially. We expect the Q4 GDP data released on Monday ahead of the BoJ

meeting to show that Japan recovered substantially in Q4 following the technical

recession in Q2 and Q3 in the wake of the consumption tax hike in April. We expect

GDP to expand a solid 1.1% q/q in Q4 after contracting -0.5% q/q in Q3. There

appears to have been strength across the board, with both private consumption and net

exports contributing substantially to GDP growth in Q4.

We expect foreign trade data for January, also due to be released next week, to show

that the strong export performance in Q4 has continued into early 2015. We believe

export growth accelerated further in January to 14.5% y/y, from 12.8% y/y in

December, while import growth eased to -1.6% y/y from 1.9% y/y partly on the back

of lower crude oil prices. Consequently, Japan’s trade balance deficit is currently also

declining. Finally, the flash estimate for the Markit/JMMA manufacturing PMI for

February is also set to be released next week. Our model based on the Economic

Watchers business survey suggests a slight improvement to 52.7 in February, from

52.2 in January.

We expect CPI inflation to decline to

0.3%

Source: ONS

Tentative signs of stabilisation in

house prices in China

Source: Macrobond Financial, Danske Bank

Markets

Strong recovery in Japan in Q4

Source: Macrobond Financial, Danske Bank

Markets

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Scandi

In Denmark, the coming week will see a further focus on the upward pressure on the

krone against the euro and so we will continue to keep a close eye on messages from

the Nationalbank, which has said that it will use all necessary means to defend the

fixed-rate policy. The week ahead also brings the latest results for consumer

confidence. We expect the indicator to fall from 9.0 in January to 7.0 in February,

which should be seen as a normalisation following the jump in January. This is still a

high level, though, thanks partly to low petrol prices and low inflation boosting

consumers’ purchasing power. Statistics Denmark is also due to release retail sales

figures for January during the week.

In Sweden, the week ahead will be about one thing and one thing only – the January

consumer price index (Tuesday at 09:30 CET). In our view, this particular number has

the ability to make even the most seasoned trader break into tears. The reason is that

Statistics Sweden applies a reweighting of the products that constitute the CPI basket

every January. Normally, this implies lower inflation (on average the effect is -0.1pp

to -0.2pp) and has sometimes subtracted as much as 0.5pp from inflation but at times

it has even contributed to inflation. In our forecast, we have assumed a -0.1pp effect

and as the Riksbank has a headline number only a couple of hundredths above ours,

we can only assume that it makes more or less the same estimate. Another, related,

issue is how different weighting will hit forecasts, i.e. even if headline inflation were

to hit our forecast, large shifts in the weights could push the forecast inflation path in

either direction. Thus, it seems as though the suspense continues for yet another

week....

In Norway, data is set to be thin on the ground, with the only release of note trade

balance data for January. Stronger global growth and a weaker krone boosted

mainland exports towards the end of 2014 and higher export growth helped counter

the negative impact on the economy of lower activity in oil-related industries. The

January figures for mainland exports will, therefore, give us an idea of whether this

has continued to be the case this year.

Consumer confidence still high

Source: Statistics Denmark

If not next week, then when? In the

future

Source: Macrobond Financial

Strong export growth

Source: Macrobond Financial

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Market movers ahead

Source: Bloomberg, Danske Bank Markets

Global movers Event Period Danske Consensus Previous

Mon 16-Feb 0:50 JPY GDP, preliminary q/q|ann. 4th quarter 1.1%|… 0.90%|3.70% -0.50%|-1.90%

17:30 EUR Eurogroup meeting on Greece

Tue 17-Feb 10:30 GBP CPI m/m|y/y Jan -0.9%|0.3% -0.80%|0.40% 0.00%|0.50%

11:00 DEM ZEW exspectations Index Feb 64.0 55.5 48.4

16:00 USD NAHB Housing Market Index Index Feb 56.9 58.0 57.0

18:15 CHF SNB President Jordan Speaks in Brussels

Wed 18-Feb - JPY BoJ target for exspansion of monetary base trn. Yen 80 80 80

- JPY BoJ monetary policy announcement

10:30 GBP Minutes from MPC meeting Feb

14:30 USD Housing starts 1000 (m/m) Jan 1096K (0.60%) 1073K 1089K (4.40%)

20:00 USD minutes from Jan. 27-28 FOMC Meeting

23:00 USD Fed's Powell (voter, neutral) speaks

Thurs 19-Feb - EUR ECB publishes minutes (accounts)

8:45 FRF HICP, preliminary m/m|y/y Jan …|-0.3% …|-0.3% 0.10%|0.10%

Fri 20-Feb 10:00 EUR PMI composite, preliminary Index Feb 53.0 53.0 52.6

10:00 EUR PMI manufacturing, preliminary Index Feb 51.5 51.4 51.0

10:00 EUR PMI services, preliminary Index Feb 53.3 53.0 52.7

10:30 GBP Retail Sales m/m|y/y Jan -0.20%|6.10% 0.40%|4.30%

15:45 USD Markit manufacturing PMI, preliminary Index Feb 53.6 53.9

Scandi movers Event Period Danske Consensus Previous

Tue 17-Feb 9:30 SEK Underlying inflation CPIF m/m|y/y Jan -1.08%|0.53% 0.20%|0.50%

Fri 20-Feb 9:00 SEK Economic Tendency Survey Index Feb 105.6

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Global macro and market themes

Fed hike in June back on the agenda

In the US a rate hike as soon as June is back on the agenda.

First, the labour market for January was strong across the board, see US: very strong

employment report, 6 February 2015. Overall, the combination of better wage growth and

continued solid growth in employment should give the Fed more confidence that the

labour market is still improving.

Second, the communication from Fed members has turned more hawkish. Three

voting members of Fed’s FOMC have been speaking since the release of the strong labour

market report. San Francisco Fed president John Williams in an interview in Financial

Times said that the time for the Fed to start raising interest rates is moving ‘closer and

closer’ and that there is an increasing risk that the Fed ‘could be behind the curve’, see

Financial Times. Williams also said that a decision on whether to hike interest rates

would be ‘in play in June’. Williams’s comments are notable because he is usually

regarded as slightly dovish. Richmond Fed president Jeffrey Lacker in a speech said he

favoured a rate hike in June, which is less surprising as he is regarded a moderate hawk.

However, Jerome Powell, a member of the Fed’s governing board, in a speech said that

he believed it was too early to remove the phrase that the Fed can afford to be ‘patient’.

This would effectively rule out an interest rate hike in June, as according to Janet Yellen

‘patient’ should be interpreted as meaning that interest rates will not be raised at the next

two meetings.

Fed hike possible as soon as June

In light of the strong labour market report and more hawkish communication from Fed

members we stick to our call that Fed will deliver the first rate hike in June this year

but we expect the pace of subsequent hikes to be slow initially. We also acknowledge

risks are still skewed towards a later hike (July or September) as low inflation gives Fed

room to be patient. In the wake of the strong labour market report money market futures

are now also pricing an earlier rate hike. A 25bp rate hike in September is now priced

with 90% probability, whereas a 25bp rate hike in June is priced with a 25% probability.

The market pricing of the first rate hike in our view is still complacent and markets

will probably continue to gradually price an earlier Fed hike in the coming months.

Hence, the USD and treasury bond yields should continue to move higher in the coming

months. In our view the 2-5 year segment on the US yield curve is probably the most

sensitive to pricing of an earlier Fed hike. In Europe we expect low bond yields to

continue to be underpinned by the aggressive monetary easing across Europe.

Key points

Strong labour market report

clears way for Fed hike as soon as

June

Market pricing of Fed is still too

complacent - USD and treasury

yields to go higher

Aggressive easing across Europe

expected to underpin low bond

yields

Euro area and Japan appear to be

recovering

Bank of Japan unlikely to join

easing party next week

Strong private consumption in G3

underscores that deflation has not

been destructive so far

Strong labour market in the US

Source: Macrobond Financial

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Private consumers fuel recovery in G3

Data released in the past week suggest that global growth is firming and supports

our view that global growth will pick up in H1 15. OECD’s leading indicators for

December improved further for G3, driven primarily by strong improvements in the euro

area and Japan, see Euro area is recovering, 11 February 2015. However, according to

OECD’s leading indicators emerging markets remain fragile: There are tentative signs of

stabilisation in India and China but Russia appears to be contracting sharply and Brazil

remains subdued.

In G3 the improvements have to a large degree been driven by private consumers.

Consumer confidence in the US has surged recently and in the past two months consumer

confidence has also started to recover in the euro area and Japan. Lower gasoline prices

are an important explanation. Another one is improving labour markets. Even in the euro

area the unemployment rate appears to have peaked but it remains high. Private

consumption has been relatively strong in the G3 countries. This suggests that so far

deflation has not been of the ‘destructive’ kind and the boost to real purchasing power

from particularly the lower crude oil price has more than offset any concerns about

declining consumer prices.

Recovery in euro area and Japan

In the euro area GDP in Q4 expanded slightly more than expected by 0.3% q/q after

increasing 0.2% q/q in the previous quarter. The details in the national accounts data

have not yet been published, nor have the main growth drivers. However, retail sales in

the euro area were strong in Q4, suggesting that growth in private consumption also

improved. Germany returned as the most important growth engine with GDP growth

accelerating markedly to 0.7% q/q in Q4 from just 0.1% q/q in the previous quarter.

In the US retail sales data for January were slightly disappointing with core retail

sales only increasing 0.1% m/m after declining 0.3% m/m in the previous month. Hence,

on the surface it looks like retail sales lost a bit of momentum in early 2015. There could

be a slight downside risk to our forecast of 2.9% q/q annualised GDP growth in Q1.

Nonetheless, private consumption in our view is still on track to increase 3.5% q/q

annualised in Q1 after increasing a solid 4.3% q/q annualised in the previous quarter.

Hence, the private consumer remains the main growth engine in the US.

In Japan the first estimate for GDP growth in Q4 is expected to show that GDP

expanded solidly by 4.4% q/q annualised after the technical recession in Q2 and Q3.

Growth in private consumption is expected to accelerate to 2.9% q/q annualised in Q4

from 1.6% q/q annualised in the previous quarter and hence appears to have recovered

after the consumption tax hike in April. The implication in our view is that Bank of Japan

is unlikely to join the current easing party in Europe in connection with next week’s

monetary meeting.

Euro area and Japan appear to be

recovering

Source: Macrobond Financial

Consumer confidence improves in G3

Source: Macrobond Financial

Retail sales suggest solid private

consumption in the euro area

Source: Macrobond Financial, Danske Bank

Markets

Strong recovery in Japan in Q4

Source: Macrobond Financial, Danske Bank

Markets

8 | 13 February 2015 www.danskeresearch.com

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Global market views

Source: Danske Bank Markets

Asset class Main factors

Equities

Positive on 3m horizon, moderately positive on 12m horizon Strong US outlook, moderate Chinese growth, a sharp drop in the o il price and

QE from ECB and BoJ and stimulus from PBoC is supportive of equities. In addition equities are still

attractive versus bonds

Bond market

M edium term moderate rise Strenthening G3 growth and Fed hikes getting closer. ECB QE supporting EGB markets.

US-Euro spread: Wider 2-5y, stable longer maturities Policy divergence drives short-end spread wider, longer-end spread stable

Peripheral spreads to continue gradual tightening Neg. policy rate, QE expectations and improving fundamentals support search for yield.

Credit spread to remain stable, but with bouts of vo latility Added liquidity from ECB, stable fundamentals and search for yield

FX

EUR/USD - Lower short- and medium-term Lower on 0-6 months on diverging growth and monetary policy

USD/JPY - Higher Relative monetary policy, Fed hikes and outflows will remain supported by pension reform

EUR/SEK - Near-term risk tilted to the upside Near-term risk tilted to the upside, lower medium term on valuation and relative monetary policy

EUR/NOK - To edge higher short-term on o il, lower during 2015 Oil prices lower short term, higher medium term

Commodities

Oil prices - close to the bottom, recovery during the year Higher global growth, supply consolidation to support recovery this year. Limited risk of supply disruptions

M etal prices sideways before trending up during the year Chinese growth concerns a near-term negative factor, supply side risks.

Gold prices to correct lower still Trending down as first Fed hike draws closer. Geopolitical concerns a supportive factor.

Agricultural risks remain on the upside Trending up again, extreme weather is key upside risk.

9 | 13 February 2015 www.danskeresearch.com

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Scandi update

Denmark – deflation a reality in January

With the krone still coming under upward pressure, the Nationalbank was in the limelight

again during the week. Although the market anticipated a further rate cut on Thursday,

the bank decided to leave things alone rather than make its policy rates clearly the world’s

absolute lowest. This inaction could mean the bank will increasingly intervene instead to

weaken the currency by flooding the market with kroner rather than make further rate

cuts. This said, we cannot rule out further cuts, especially if the appreciation pressure

intensifies.

Statistics Denmark released inflation figures for January during the week showing that

consumer prices fell 0.1% y/y. This is the first time since 1954 that prices have fallen,

giving us – in principle – not inflation but deflation. There are three reasons for the fall.

First, and most important, the protracted crisis in Europe is making it difficult for

businesses to put up prices and for workers to demand higher wages, resulting in low

inflation. Second, the sharp slide in oil prices has brought much cheaper petrol and oil for

consumers in recent months. Third, the security-of-supply tax on heating was rolled back

at the start of the year, tipping inflation below zero. Deflation is often portrayed as the

big, bad wolf and evokes memories of the Great Depression of the 1930s, but cheaper

petrol is by no means a reason to be unhappy. The danger comes if negative expectations

become entrenched, leading to a prolonged decline in wages, house prices and so on, as

then households’ debts could grow in real terms even if they make repayments. But this is

not the situation we are seeing now, and the current flirtation with deflation is in all

probability only a very temporary phenomenon. We expect to see a return to positive

territory in February.

Sweden – a primer on the Riksbank

The main policy rate, the repo rate, was lowered into negative territory (to -0.1%) when

the Riksbank executive board convened past Wednesday. It is a first in Sweden, and – as

far as we know – it is the first negative main policy rate (no, deposit rates don’t really

count) for any inflation targeter. However, in addition to lowering rates, the Riksbank will

also make a first shot (sort of) on QE, buying nominal government bonds for a total of

SEK10bn.

Despite all the fuss that the Riksbank’s decision created, it really won’t make much of a

difference. Instead, the main effect will probably stem from the promise of ‘more to

come’ and, hopefully, from the weakening krona. We expect the Riksbank to be forced to

act again, possibly as soon as the beginning of March (11 March, when wage and

inflation expectations are being published), which would constitute an intra-meeting

policy action since the next official meeting date is 28 April. However, as early as next

week we will receive information that could prove decisive for further Riksbank measures

(more on that in the Market mover section), when January inflation numbers are

published.

Nationalbank leaves rates alone

Source: Danmarks Nationalbank

Deflation in January

Source: Statistics Denmark

Riksbankers are a negative lot

Source: Macrobond Financial, Riksbank, Danske

Bank Markets

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Norway – Still no need to panic

The GDP figures for Q4 revealed that the slide in oil prices has now begun to affect the

Norwegian economy. Oil investment is falling and taking mainland business investment

with it. On the other hand, mainland exports are rising relatively rapidly on the back of

stronger global growth and a weaker krone. The rate cuts also seem to have stimulated

consumption, while housing investment has surprisingly dropped off somewhat. We also

note that public-sector consumption and investment are continuing to grow, which goes to

show how the spending of oil revenue is completely shielded from earnings in the short

term. We expect this trend to continue through the year, with lower activity in oil-related

industries offset to some extent by low interest rates, a weaker krone and expansionary

fiscal policy. Unless oil prices fall significantly further, there is therefore little risk of a

serious downturn in the Norwegian economy.

A new normal?

Source: Macrobond Financial

11 | 13 February 2015 www.danskeresearch.com

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Latest research from Danske Bank Markets

13 Febraury Flash Comment: Euro area recovery gains momentum

The euro area economy expanded 0.3% q/q in Q4 up from 0.2% q/q in Q3. This was a bit

below our expectation (0.4%) but above consensus expectations (0.2%).

12 February Flash Comment - UK: Bank of England inflation report supports the case

for rate hike in 2015

The Bank of England’s inflation report released today was relatively mixed, with a quite

dovish short-term focus on inflation but also a more confident view on the medium-term

outlook for the UK economy.

12 February Flash Comment: Minsk 2.0 - not a game changer for the Russian rouble

The 16-hour Minsk talks have ended, adopting new measures. The headline-driven RUB

market returns to pre-talks mode. We keep our view on the RUB unchanged, as we do not

expect any major support from macro figures in 2015.

11 February Global Business Cycle: Euro area is recovering

Leading indicators continue to pick up in the G3, driven primarily by improvements in

the euro area and Japan.

10 February Periphery business cycle monitor

In the euro periphery, the Greek political uncertainty is in focus. The spillover to other

periphery countries has so far been relatively limited.

12 | 13 February 2015 www.danskeresearch.com

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Macroeconomic forecast

1. % y/y

2. % contribution to GDP growth

3. % of labour force. 4) % of GDP

Source: OECD, Danske Bank

Macro forecast, Scandinavia

Denmark 2014 0.9 0.4 0.9 2.2 0.3 2.8 3.8 0.6 5.1 2.3 44.5 6.82015 1.6 1.9 0.9 2.2 -0.1 2.3 2.9 0.6 4.9 -2.4 42.5 6.42016 2.0 2.0 0.6 4.0 0.1 4.2 4.6 1.5 4.7 -2.4 43.0 5.9

Sweden 2014 1.8 2.3 1.5 4.6 0.3 2.2 4.9 -0.2 7.9 -1.9 40.2 5.12015 2.0 1.6 1.5 3.4 0.1 3.2 3.7 0.3 7.6 -1.6 42.0 5.02016 1.9 1.8 0.8 2.1 0.0 5.0 4.5 1.2 7.3 -1.0 42.3 4.8

Norway 2014 2.6 1.8 3.3 1.2 0.4 0.4 2.6 2.1 3.5 - - -2015 1.8 2.0 2.5 -5.5 -0.1 0.8 3.8 2.8 3.7 - - -2016 2.3 2.2 2.2 1.3 0.0 0.9 3.3 2.0 3.7 - - -

Macro forecast, Euroland

Euroland 2014 0.9 0.9 0.9 0.6 -0.1 3.7 3.6 0.4 11.6 -2.6 92.7 2.52015 1.5 1.6 0.9 1.3 0.0 4.5 4.3 -0.3 11.5 -2.3 92.8 2.62016 2.0 1.1 0.7 5.4 0.0 4.2 4.1 1.4 10.9 -1.9 91.5 2.5

Germany 2014 1.6 1.3 1.1 2.9 -0.1 4.1 3.7 0.8 5.1 0.2 74.5 7.12015 2.0 2.2 1.1 2.4 0.0 5.5 5.6 0.2 5.0 0.0 72.4 7.12016 2.6 1.6 0.8 6.8 0.0 4.9 5.3 2.1 4.7 0.2 69.6 6.7

France 2014 0.3 0.4 2.0 -1.7 -0.1 2.5 3.2 0.6 10.4 -4.4 95.5 -1.92015 0.6 0.8 1.1 -0.8 0.0 4.4 4.0 0.1 10.4 -4.5 98.1 -1.92016 0.9 0.6 0.4 3.1 0.0 3.4 4.0 1.3 10.2 -4.7 99.8 -2.2

Italy 2014 -0.4 0.3 -0.2 -2.6 0.3 1.9 0.4 0.2 12.6 -3.0 132.2 1.52015 0.5 0.6 0.3 -1.4 0.0 3.5 2.3 0.1 12.6 -2.7 133.8 1.52016 1.2 0.5 0.4 3.4 0.0 4.3 3.8 1.0 12.4 -2.2 132.7 1.8

Spain 2014 1.3 2.3 0.8 2.5 -0.1 4.6 7.7 -0.2 24.7 -5.6 98.1 0.52015 2.3 2.4 0.3 4.8 0.0 6.0 7.0 -0.8 23.2 -4.5 101.2 0.72016 2.6 1.9 0.4 6.8 0.0 4.5 4.9 1.3 21.7 -3.7 100.6 0.9

Finland 2014 -0.2 -0.2 0.2 -4.5 - 1.5 -0.5 1.0 8.6 -2.2 59.5 -1.52015 0.5 -0.2 0.0 0.0 - 3.0 1.5 0.9 9.0 -2.2 61.5 -1.02016 1.3 0.5 0.0 3.0 - 4.0 3.0 1.2 8.8 -1.5 62.5 -0.5

Macro forecast, Global

USA 2014 2.4 2.5 -0.2 5.2 0.1 3.1 3.9 1.6 6.2 -4.1 101.0 -2.32015 3.1 3.8 1.1 4.2 -0.1 3.6 4.8 0.0 5.2 -2.9 104.0 -2.52016 2.7 2.9 0.9 5.3 0.0 3.7 5.0 2.4 4.6 -2.6 103.0 -2.6

Japan 2014 0.4 -0.9 0.3 4.2 0.2 7.9 7.0 2.6 3.6 -8.1 245.0 0.32015 1.2 1.0 1.1 0.7 0.3 7.2 3.5 1.4 3.5 -6.7 245.0 1.02016 1.6 1.4 1.2 0.8 0.4 7.6 7.0 1.7 3.3 -6.3 246.0 1.1

China 2014 7.4 - - - - - - 2.0 4.3 -1.1 40.7 1.82015 7.2 - - - - - - 2.2 4.2 -0.8 41.8 2.42016 6.8 - - - - - - 2.7 4.2 -0.8 42.8 2.3

UK 2014 2.6 2.3 1.1 7.8 -0.2 -1.6 -0.8 1.5 6.2 -3.5 80.0 -4.72015 2.8 2.5 0.7 6.1 0.0 2.4 3.9 1.5 5.5 -1.9 81.1 -3.52016 2.8 2.3 -1.0 7.5 0.0 4.7 4.7 2.0 5.5 -0.2 . -2.9

Current

acc.4

GDP 1

Private

cons.1

Public

cons.1

Fixed

inv.1

Stock

build.2

Ex-

ports1

Im-

ports1

Infla-

tion1

Unem-

ploym.3

Public

budget4

Public

debt4

Year

Year GDP 1

Private

cons.1

Public

cons.1

Fixed

inv.1

Stock

build.2

Ex-

ports1

Im-

ports1

Infla-

tion1

Unem-

ploym.3

Public

budget4

Current

acc.4

Public

debt4

Current

acc.4

Im-

ports1

Public

debt4

Public

budget4

Ex-

ports1

Infla-

tion1

Unem-

ploym.3

Year GDP 1

Private

cons.1

Public

cons.1

Fixed

inv.1

Stock

build.2

13 | 13 February 2015 www.danskeresearch.com

Weekly Fo

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Weekly Focus

Financial forecasts

Source: Danske Bank Markets

Bond and money markets

Currencyvs USD

Currencyvs DKK

USD 13-Feb - 651.3

+3m - 664.6

+6m - 676.7+12m - 664.6

EUR 13-Feb 114.3 744.4

+3m 112.0 744.4

+6m 110.0 744.4+12m 112.0 744.4

JPY 13-Feb 118.9 5.48

+3m 121.0 5.47

+6m 124.0 5.47+12m 126.0 5.28

GBP 13-Feb 153.9 1002.2

+3m 148.0 979.5

+6m 147.0 992.5+12m 148.0 966.8

CHF 13-Feb 92.8 702.0

+3m 86.6 767.4

+6m 90.9 744.4+12m 93.8 709.0

DKK 13-Feb 651.3 -

+3m 664.6 -

+6m 676.7 -+12m 664.6 -

SEK 13-Feb 843.3 77.2

+3m 830.4 80.0

+6m 836.4 80.9+12m 803.6 82.7

NOK 13-Feb 759.0 85.8

+3m 758.9 87.6

+6m 750.0 90.2+12m 727.7 91.3

Equity Markets

Regional

Price trend12 mth.

Regional recommen-dations

USA (USD) Strong earnings growth, expensive valuation 5-8% Neutral

Emerging markets (local curr) Commodity-related equities are pressured 0-5% Underweight

Japan Reflation, earnings growth, fair valuation 5-10% Overweight

Europe (ex. Nordics) Reflation, multiple expansion, attractive valuation 10-15% OverweightNordics Earnings growth, fair valuation 5-10% Overweight

Commodities

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2015 2016

NYMEX WTI 54 58 66 74 78 80 82 82 63 81

ICE Brent 58 62 70 78 82 84 86 86 67 85

Copper 6,800 6,925 7,050 7,175 7,300 7,375 7,375 7,375 6,988 7,356

Zinc 2,325 2,350 2,375 2,400 2,425 2,450 2,450 2,450 2,363 2,444

Nickel 17,500 18,000 18,500 19,000 19,250 19,500 19,500 19,500 18,250 19,438

Aluminium 2,025 2,075 2,125 2,175 2,225 2,250 2,250 2,250 2,100 2,244

Gold 1,190 1,180 1,170 1,160 1,150 1,150 1,150 1,150 1,175 1,150

Matif Mill Wheat (€/t) 177 180 182 183 185 186 188 190 181 187

Rapeseed (€/t) 347 354 357 361 364 367 371 374 355 369

CBOT Wheat (USd/bushel) 565 575 580 585 590 595 600 605 576 598

CBOT Corn (USd/bushel) 385 395 400 405 410 415 420 425 396 418CBOT Soybeans (USd/bushel) 1,050 1,070 1,080 1,090 1,100 1,110 1,120 1,130 1,073 1,115

357

Average

Key int.rate

0.25

0.25

0.501.00

1.00

-0.85

0.05

0.05

0.100.10

0.50

10-yr swap yield

0.01

0.05

0.050.05

3m interest rate

1.20

0.05

0.10

0.50

-0.75

0.05

-0.02

0.55

0.751.10

-0.85-0.85

0.05

0.50

0.30

0.00

0.10

-0.54

-0.82

1.00

-0.84-0.78

-0.10

-0.10

-0.10

0.25

0.25

1.25

-0.10

-0.10-0.10

1.00

1.00

1.20

1.20

0.26

0.05

0.10

0.57

-0.93

0.46

0.741.32

-0.02

-0.02

0.20

0.15

0.20

1.00

1.00

0.25

1.10

0.25

1.111.38

0.00

0.000.00

-0.76

-0.74-0.69

-0.01

0.25

1.402.00

1.10

1.401.75

0.20

0.200.25

114.3

-

-

--

135.9

744.4

744.4744.4

963.9

867.5

815.0

930.0

825.0

920.0900.0

850.0

106.0

744.4

76.0

77.0

97.0

100.0105.0

112.0

110.0112.0

136.0

136.0141.0

Currencyvs EUR

2-yr swap yield

Risk profile3 mth.

Price trend3 mth.

2.35

2.12

2.65

0.90

0.13

0.17

0.94

-0.79

-0.10

0.15

0.150.15

1.10

74.3

3.15

75.0

386

13-Feb

52

14,705

5,740

2,146

1,227

185

60

1,842

20162015

0.80

0.851.00

0.75

0.800.85

1.79

1.85

0.60

Medium 0-5%

992

524

0.69

1.001.10

1.78

1.70

1.90

2.002.40

0.12

0.04

0.080.16

2.25

0.901.00

0.85

0.94

0.95

0.72

Medium

Medium

Medium 0-8%

Medium 0-5%

0-5%

0-5%

14 | 13 February 2015 www.danskeresearch.com

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Weekly Focus

Calendar

Source: Danske Bank Markets

Key Data and Events in Week 8

During the week Period Danske Bank Consensus Previous

Sat 14 - 18 CNY FDI y/y Jan 10.30%

Sun 15 NOK Consumer confidence Net. bal. 1st quarter 15.4

Sun 15 NZD Retail sales q/q 4th quarter 1.30% 1.50%

Monday, February 16, 2015 Period Danske Bank Consensus Previous

USD US markets closed for president's day

0:50 JPY GDP, preliminary q/q|ann. 4th quarter 1.1%|… 0.90%|3.70% -0.50%|-1.90%

0:50 JPY GDP deflator, preliminary y/y 4th quarter 1.90% 2.00%

1:01 GBP Rightmove House Prices m/m|y/y Feb 1.40%|8.20%

5:30 JPY Industrial production, final m/m|y/y Dec 1.00%|0.30%

9:00 CHF SNB - Sight Deposits

10:00 NOK Trade balance NOK bn Jan 30.1

11:00 EUR Trade balance EUR bn Dec 19 20

15:00 EUR Eurogroup meeting in Brussels

17:30 EUR Eurogroup meeting on Greece

Tuesday, February 17, 2015 Period Danske Bank Consensus Previous

2:30 CNY Property prices y/y

9:00 EUR ECOFIN meeting

9:30 SEK CPI m/m|y/y Jan -1.2%|-0.3% 0.2%|-0.3%

9:30 SEK Underlying inflation CPIF m/m|y/y Jan -1.08%|0.53% 0.20%|0.50%

10:30 GBP CPI m/m|y/y Jan -0.9%|0.3% -0.80%|0.40% 0.00%|0.50%

10:30 GBP CPI core y/y Jan 1.4% 1.30%

10:30 GBP PPI - input m/m|y/y Jan -2.20%|-11.90% -2.40%|-10.70%

10:30 GBP PPI - output m/m|y/y Jan -0.30%|-1.40% -0.30%|-0.80%

11:00 DEM ZEW current situation Index Feb 30.0 27.0 22.4

11:00 DEM ZEW exspectations Index Feb 64.0 55.5 48.4

14:30 USD Empire Manufacturing PMI Index Feb 9.0 10.0

16:00 USD NAHB Housing Market Index Index Feb 56.9 58.0 57.0

18:15 CHF SNB President Jordan Speaks in Brussels

18:45 USD Fed's Plosser (non-voter, hawkish) speaks

22:00 USD TICS international capital flow, Net inflow USD bn Dec -6.3

Wednesday, February 18, 2015 Period Danske Bank Consensus Previous

- JPY BoJ target for exspansion of monetary base trn. Yen 80 80 80

- JPY BoJ monetary policy announcement

10:30 GBP Average Earnings 3Ms/YoY Dec 1.7 1.7

10:30 GBP Minutes from MPC meeting Feb

10:30 GBP ILO Unemployment rate % Dec 5.80% 5.70% 5.80%

13:00 USD MBA Mortgage Applications %

14:30 USD Housing starts 1000 (m/m) Jan 1096K (0.60%) 1073K 1089K (4.40%)

14:30 USD Building permits 1000 (m/m) Jan 1068K (0.95%) 1070K 1058K (0.60%)

14:30 USD PPI m/m|y/y Jan -0.40%|0.40% -0.30%|1.10%

14:30 USD PPI core m/m|y/y Jan 0.10%|2.00% 0.30%|2.10%

15:15 USD Capacity utilization % Jan 79.90% 79.70%

15:15 USD Industrial production m/m Jan 0.40% 0.40% -0.10%

20:00 USD minutes from Jan. 27-28 FOMC Meeting

23:00 USD Fed's Powell (voter, neutral) speaks

15 | 13 February 2015 www.danskeresearch.com

Weekly Fo

cus

Weekly Focus

continued

Source: Danske Bank Markets

Thursday, February 19, 2015 Period Danske Bank Consensus Previous

- EUR ECB publishes minutes (accounts)

0:50 JPY Export y/y (%) Jan 14.5 13.50 12.80

0:50 JPY Import y/y (%) Jan -1.6 -4.80 1.90

0:50 JPY Trade balance, s.a. JPY bn Jan -599.1 -712.1

5:30 JPY All industry activity index m/m Dec -0.20% 0.10%

6:00 JPY Leading economic index, final Index Dec 105.2

8:00 CHF Trade balance CHF bn Jan 1.52

8:45 FRF HICP, preliminary m/m|y/y Jan …|-0.3% …|-0.3% 0.10%|0.10%

9:00 DKK Consumer confidence Net. bal. Feb 7.0 9.0

10:00 EUR Current account EUR bn Dec 18.1

14:30 USD Initial jobless claims 1000

16:00 EUR Consumer confidence, preliminary Net bal. Feb -7.5 -8.0 -8.5

16:00 DKK Press release from Danish CB if any changes to policy rates (no press release if no changes)

Friday, February 20, 2015 Period Danske Bank Consensus Previous

- EUR Moody's may publish Spain's debt rating

2:35 JPY Markit/JMMA manufacturing PMI, preliminary Index Feb 52.7 52.5 52.2

9:00 DKK Retail Sales m/m|y/y Jan -0.50%|2.30%

9:00 FRF PMI manufacturing, preliminary Index Feb 49.5 49.6 49.2

9:00 FRF PMI Services, preliminary Index Feb 49.8 49.9 49.4

9:00 SEK Economic Tendency Survey Index Feb 105.6

9:00 SEK Consumer confidence Index Feb 98.6

9:00 SEK Manufacturing confidence Index Feb 107.3

9:30 DEM PMI manufacturing, preliminary Index Feb 51.8 51.4 50.9

9:30 DEM PMI service, preliminary Index Feb 54.6 54.3 54.0

10:00 EUR PMI composite, preliminary Index Feb 53.0 53.0 52.6

10:00 EUR PMI manufacturing, preliminary Index Feb 51.5 51.4 51.0

10:00 EUR PMI services, preliminary Index Feb 53.3 53.0 52.7

10:30 GBP Retail Sales m/m|y/y Jan -0.20%|6.10% 0.40%|4.30%

11:00 ITL HICP, final m/m|y/y Jan ...|-0.40%

14:30 CAD Retail sales m/m Dec -0.40% 0.40%

15:45 USD Markit manufacturing PMI, preliminary Index Feb 53.6 53.9

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

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

16 | 13 February 2015 www.danskeresearch.com

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Disclosures This research report has been prepared by Danske Bank Markets, 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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Calculations and presentations in this research report are based on standard econometric tools and methodology

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Major risks connected with recommendations or opinions in this research report, including a sensitivity analysis

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General disclaimer This research has been prepared by Danske Bank Markets (a division of Danske Bank A/S). It is provided for

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Weekly Focus

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