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Daily CommentRaiffeisen RESEARCH

29 July 2011

Established markets:The markets continued to be dominated bythe government debt issue: Italyhad to contend with rate rises ac-ross the entire yield spectrum in yesterdays issues. Ten-year bondswere, for example, issued at a rate of just under 5.8%. The politicalcrisis in the USAheightened further. After Democrats and Repub-licans had until recently wanted to put their own draft legislationto the vote, yesterday Republican Boehner the majority leader in

the House of Representatives couldnt even raise a majority in hisown party ranks. Today the argument continues. On the data side,todays spotlight will be on the initial US GDP estimatefor the se-cond quarter. Based on available monthly data, we are expectinggrowth of an annualised 2.2% qoq. Attention should be paid tothe revision of the GDP time series for the past years. The currentdata for this year could undergo substantial change and be ac-companied by a revision of this years growth estimates (amendedstatistical overhang, base effects). The Chicago PMI delivers thelast indication for the week after nexts upcoming ISM Index forthe manufacturing industry. The published German estimates con-firm our inflation forecast for the Eurozone, which is far above theconsensus. The rise in EUR inflation is attributable to a strong baseeffect and is not an indication of a lasting wave of inflation. Weconsider Belgian GDP growth for the second quarter as being indi-cative for the whole of Europe.

Equity markets: After temporary gains, the US equities indicesDow Jones and S&P 500 closed lower again yesterday, with onlythe Nasdaq Composite achieving minor gains. In addition to thedebilitating debate on lifting the debt ceiling, company news tookcentre stage again. Once more, it painted a mixed picture. Thefigures presented by Green Mountain were good. The organiccoffee producer reported strong business performance and of-fered superb guidance. Investors rewarded the figures by pro-

pelling the stock upwards by more than 16%. With gains of over200%, the stock has been the best performer in the Nasdaq 100since the beginning of the year. The quarterly figures reported byDow component DuPont were also impressive across the board,

Hourly Q/FGBLc1 20:0022.07.2011- 19:0029.07.2011(FFT)

129,4738,2%

129,8561,8%

128,23100,0%

128,46161,8%

129,6338,2%

129,7961,8%

130,04100,0%

129,2238,2%

129,161,8%

128,9100,0%

128,58161,8%

Cndl;Q/FGBLc1;LastTrade

22:0028.07.2011;129,47;129,59;129,46;129,59

2MA;Q/FGBLc1;LastTrade(Last); 13;144;Simple;

22:0028.07.2011;129,53; 128,54

Cndl;Q/FGBLc1;LastTrade

22:0028.07.2011;129,47;129,59;129,46;129,59

2MA;Q/FGBLc1;LastTrade(Last); 13;144;Simple;

22:0028.07.2011;129,53; 128,54

Price

EUR

.12

128,2

128,4

128,6

128,8

129

129,2

129,4

129,6

129,8

130

Price

EUR

.12

128,2

128,4

128,6

128,8

129

129,2

129,4

129,6

129,8

130

2 1 :0 0 0 9 :0 0 1 1 :0 0 1 3 :0 0 1 5 :0 0 1 7 :0 0 1 9 :0 0 2 1 :0 0 0 9 :0 0 1 1 :0 0 1 3 :0 0 1 5 :0 0 1 7 :0 0 1 9 :0 0 2 1 :0 0 0 9 :0 0 1 1 :0 0 1 3 :0 0 1 5 :0 0 1 7 :0 0 1 9 :0 0 2 1 :0 0 0 9 :0 0 1 1 :0 0 1 3 :0 0 1 5 :0 0 1 7 :0 0 1 9 :0 0 2 1 :0 0 0 9 :0 0 1 1 :0 0 1 3 :0 0 1 5 :0 0 1 7 :0 0 1 9 : 0 0

25 Juli 2011 26 Juli 2011 27 Juli 2011 28 Juli 2011 29 Juli 2011

Chart of the day

Source: Thomson Reuters, Raiffeisen RESEARCH

Market overviewcur. 1T 52W H 52W L Ytd

Interest rates, yields

3M Euribor EUR 1.61% -0.2 BP 1.6% 0.9% 60.4 BP

3M Libor USD 0.25% 0.1 BP 0.5% 0.2% -4.9 BP

Bund Future EUR 129.43 0.0% 134.8 119.9 3.3%

US T Note Future 124.67 0.1% 125.4 115.1 5.5%

Currencies

EUR/USD 1.430 0.1% 1.49 1.26 -6.8%

EUR/JPY 110.870 -0.5% 123.3 105.4 2.2%

EUR/CHF 1.144 -0.5% 1.4 1.1 -9.3%

EUR/CZK 24.181 0.0% 25.4 23.9 -3.5%

EUR/HUF 269.120 0.1% 289.6 261.9 -3.5%

EUR/PLN 4.010 0.0% 4.12 3.83 1.2%

Equity markets

S&P 500 1301 -0.3% 1371 1040 3.4%

Dow Jones I. A. 12240 -0.5% 12876 9937 5.7%

Nasdaq Comp. 2766 0.1% 2888 2099 4.3%

DJ EuroStoxx 50 2693 0.0% 3077 2560 -3.6%

DAX 7190 -0.9% 7600 5834 4.0%

ATX 2624 -0.7% 3013 2366 -9.7%

Nikkei 225 9834 -0.7% 10892 8228 -3.9%

Emerging Markets

Hang Seng (China) 12326 -1.5% 14219 11296 -2.9%

Sensex (India) 18174 -0.2% 21109 17296 -11.4%

Bovespa (Brazil) 58708 0.7% 73103 58169 -15.3%

JALSH ( South A frica) 31446 -0.5% 33335 26432 -2.1%

Commodities

Brent Oil USD/bbl 117 0.0% 125 79 23.3%

Gold USD/oz 1613 -0.2% 1628 1159 13.5%

Credit markets

iTRAXX Europe 107 0 BP 126 94 9 BP

ITRAXX Crossover 405 -2 BP 531 352 -7 BP

iTRAXX Fin. Senior 173 0 BP 210 107 -8 BP5J CDS Greece. 1710 11 BP 2571 661 636 BP

5J CDS Spain 276 10 BP 301 121 -2 BP

5J CDS Portugal 912 -46 BP 1131 188 490 BP

Prices as of 29 July 11, 07:47 a.m. (CET)Source: Bloomberg

Bund FutureLast: 129.59 Sell 129.33Target: 129.09 128.9Bearish Flag, stop 129.72 -> 129.85 129.97.

July 29h, 2011 07:40 CET

Important indicators todayRBI Kons. zuletzt

USA14:30 GDP, qoq, ann., advance estimate Q2 2.2% 1.7 % 1.9 %

15:45 Chicago PMI Jul n.a. 60,0 61,1

n.a. Amgen, AON, Chevron, ITT, Merck & Co. Q2

Europe11:00 EUR: Consumer prices, yoy, prel. Jul 3.0% 2.7% 2.7%

15:00 BE: GDP, qoq, prel. Q2 0.4% 0.3% 1.1 %

n.a. Continental, EADS, Eni, Total, Linde, PPR Q2

Emerging Markets1 Jul CN: PMI Manufacturing Jul n.a. 50.1 50.9

1 Jul CN: PMI Manufacturing (HSBC) Jul n.a. 50.1

Source: Bloomberg, Raiffeisen RESEARCH

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Daily Comment

with the chemicals giant exceeding analyst expecta-tions and raising its guidance. On the other hand,ExxonMobils figures were disappointing. Althoughthe energy giant was able to boost net profit subs-tantially, it still fell short of the consensus. As a result,the stock was the second worst performer in the DowJones in trading yesterday, although at 2.2% the de-cline was reasonably mild. The main Japanese equ-ities indiceshave been taking their cues from over-seas and have been weak so far this morning. Along-side the debt crisis, the very strong yen and the dis-appointing Japanese reporting season are placinga damper on sentiment. Indicators from the futuresmarket point to a weak start to trading in the Euro-pean bourses.

Credit markets:No non-financial companies issued

eurobonds on the primary market yesterday. In theUS, however, a few high-yield companies used thelast few days to place USD bonds on the market,such as Ford Motor Credit (USD 2.75 bn), ReynoldsGroup (USD 2.5 bn) and HCA (USD 5 bn). Giventhe upcoming quarterly earnings of some Europeanbanks (i.e. BNP Paribas, Unicredit, Dexia, etc.) nextweek, the EU financial market authority ESMA drewattention last evening when it proposed that banksshould break down their government bond exposureby country in regular reporting in the future.

Emerging Markets:As expected, the Brazilian infla-tion rate fell slightly in July to 8.36% yoy whereasproducer prices in South Africa were up 7.4% yoy, amuch greater increase than projected. The PMIs forChinas manufacturing industry will be published onthe morning of 1 August. At 48.9%, the HSBC PMIadvance estimate was at a surprisingly low level alt-hough it is only now becoming clear which sub-com-ponents were responsible for this drop. The officialPMI should still just about be able to maintain the50-point threshold.CEE:A week with few relevant macro data from CEEcountries ends today with publications on the ba-lance of trade and industrial production in Croatia,producer prices in Hungary and the balance of tradefrom Turkey. However, these data should not haveany relevant effects on market trends today. CEE re-mains dependent on current developments in the Eu-rozone periphery and the US debt debate. However,with a few exceptions, CEE currencies and yields arestill relatively stable given the current uncertainties.For example, the auction of local currency bonds inHungary yesterday showed no significant yield in-creases. In the two-year segment, at 6.57% the yield

was even minimally lower than that of two weeksago while at 7.4%, 10-year bonds were up a mere0.04 % on two weeks ago. The entire planned vo-lume of HUF 45 bn was issued.

Market overviewcurrent 1T 52W H 52W L Ytd

Other interest ratesEUR

Eonia 0.90% -5.4 BP 1.7% 0.3% 8.2 BP

1M Euribor EUR 1.44% -0.6 BP 1.5% 0.6% 65.4 BP

3M Euribor EUR 1.61% -0.2 BP 1.6% 0.9% 60.4 BP

6M Euribor EUR 1.82% -0.4 BP 1.8% 1.1% 59.7 BP

12M Euribor EUR 2.18% -0.7 BP 2.2% 1.4% 67.6 BP

2Y Swap EUR 1.94% -1.5 BP 2.5% 1.1% 38.0 BP

3Y Swap EUR 2.09% -2.0 BP 2.8% 1.4% 20.3 BP

5Y Swap EUR 2.51% -2.0 BP 3.2% 1.6% 1.8 BP

10Y Swap EUR 3.16% -1.9 BP 3.8% 2.3% -16.8 BP

Other currencies

EUR/GBP 0.876 -0.1% 0.9 0.8 2.1%

EUR/HRK 7.462 0.0% 7.5 7.2 1.1%

EUR/RON 4.245 0.0% 4.3 4.1 -0.8%

EUR/SEK 9.107 0.5% 9.5 8.7 1.3%

EUR/RUB 39.479 0.0% 43.9 38.8 -3.4%

EUR/UAH 11.437 -0.1% 11.9 9.9 6.8%

EUR/TRY 2.405 -1.0% 2.5 1.9 14.1%

EUR/BRL 2.247 0.5% 2.4 2.2 1.1%

EUR/CNY 9.211 -0.6% 9.7 8.5 4.2%

EUR/ZAR 9.654 0.6% 10.0 8.7 8.1%

Bond market

2Y Bund EUR 1.24% -2.3 BP 1.9% 0.6% 37.7 BP

5Y Bund EUR 1.82% -1.5 BP 2.8% 1.2% -1.5 BP

10Y Bund EUR 2.63% -1.8 BP 3.5% 2.1% -33.0 BP

2Y US Treasury 0.41% -0.8 BP 0.8% 0.3% -18.3 BP

5Y US Treasury 1.50% -2.0 BP 2.4% 1.0% -50.1 BP

10Y US Treasury 2.93% -1.1 BP 3.7% 2.4% -35.9 BP

Interest rates CEE3M Pribor 0.8 0.0 BP 0.9% 0.8% -2 BP

3M Wibor 4.6 -1.0 BP 4.6% 3.7% 75 BP

3M Bubor 6.1 0.0 BP 6.1% 5.3% 24 BP

10Y Czech Rep. 3.8 -9.9 BP 4.2% 3.2% -8 BP

10Y Poland 5.8 -1.4 BP 6.4% 5.3% -25 BP

10Y Hungary 7.4 5.0 BP 8.4% 6.6% -52 BP

Equity markets CEE

Turkey (ISE Nat. 100) 62531 2.2% 71777 57655 -5.3%

Croatia (CROBEX) 2161 0.3% 2338 1773 2.4%

Poland (WIG20) 2721 1.2% 2942 2373 -0.9%

Romania (BET) 5366 0.0% 6099 5035 1.8%

Russia (MICEX) 1720 0.0% 1865 1328 1.9%

Serbia (BELEX15) 710 -0.4% 829 600 8.9%

Czech Rep. (PX) 1176 -0.4% 1278 1107 -4.0%

Hungary (BUX) 21323 -0.4% 24531 20147 0.0%

Commodities

WTI Oil USD/bbl 97.0 -0.5% 115.6 76.9 2.8%

Fuel oil USD/mt 973.0 -0.6% 1064.5 614.5 27.6%

Diesel USD/mt 1004.8 0.0% n.a. n.a. 27.2%

CO2 EUA Fut. EUR/mt 12.4 0.9% 15.8 13.5 -11.9%

Silver USD/oz 39.5 -0.7% 49.8 17.5 27.8%

Platinum USD/oz 1779.0 -0.5% 1886.5 1489.0 0.5%

Palladium USD/oz 824.8 -0.5% 862.3 459.3 2.9%

Steel USD/mt 618.0 0.8% 609.0 459.0 12.8%

Aluminium USD/mt 2638.0 -0.2% 2803.0 1982.3 6.8%

Copper USD/mt 9814.0 0.4% 10190.0 7028.3 2.2%

Prices as of 29 July 11, 07:47 a.m. (CET)Source: Bloomberg

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This report was completed on 29 July 2011

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Daily CommentAcknowledgements