Important disclosures and certifications are contained from page 17 of this report. www.danskeresearch.com

Investment Research — General Market Conditions

Market movers ahead

The NIESR GDP estimate for July is due on Tuesday. It is usually a good predictor of

actual GDP growth and is likely to indicate a pronounced decline in UK economic

activity. The RICS housing survey for July is also scheduled for the coming week and

should provide interesting reading, as it indicated a sharp fall in house prices in June.

US retail sales figures for July are due on Friday. We estimate growth of 0.3% in the

component that feeds into GDP. If correct, private consumption will have got off to a

good start in Q3 after a very strong Q2.

Also due next week is Sentix investor confidence. This could further enlighten us on

how hard Brexit has hit the eurozone.

Denmark, Sweden and Norway are due to publish their respective inflation figures for

July. We estimate Norwegian core inflation at 3.1%, which is 0.2-0.3pp above Norges

Bank’s June projection and could fuel uncertainty about September’s rate decision.

Global macro and market themes

Focus recently has been turning to fiscal stimulus to supplement central bank actions.

Japan took action in late July, while the EU is relaxing its fiscal rule framework in

favour of looser fiscal policies.

In the UK and US, policymakers are also indicating their intention to use fiscal

policies to lift growth prospects.

Focus

Bank of England Review: Easing package, more to follow in November, 4 August.

We estimate strong retail sales

continued in July

Follow Sentix to get more info on the

impact of the Brexit vote

Source: Census Source: Ifo, Markit PMI, Sentix, ZEW

5 August 2016

Editor

Analyst Bjørn Tangaa Sillemann +45 45 12 82 29 bjsi@danskebank.dk

Weekly Focus Sweden

Awaiting the fallout from Brexit

Contents

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

Global Macro and Market Themes ......... 6

Scandi update ....................................................... 7

Latest research from Danske Bank

Markets .................................................................. 12

Macroeconomic forecast .......................... 13

Financial forecast ............................................ 14

Calendar................................................................. 15

Financial views

Source: Danske Bank

Follow us on Twitter for the latest on

macroeconomic and financial market developments:

@Danske_Research

Major indices

05-Aug 3M 12M

10yr EUR swap 0.28 0.42 0.55

EUR/USD 111 107 114

ICE Brent oil 43 49 54

05-Aug 6M 12-24M

S&P500 2164 -3 -+3% 0-5%

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Market movers

Global

In the US, we have a few important data releases next week. In particular, we get

some interesting releases on the consumer side of the economy, which will attract

attention as private consumption continues to be the main growth engine in the US.

Although we think the US economy also risks disappointing in H2 16 due to

contagion effects from Brexit uncertainties, we think US consumers will be relatively

unaffected. It is mainly through continued weak non-residential investments that the

US economy could take a hit from Brexit. However, any contagion effects are yet to

be seen. The most important data release is the retail sales report for July due on

Friday. We estimate the retail sales control group (the component that feeds into

GDP) grew 0.3% m/m in July. If we are right, private consumption growth was off to

a great start in Q3 after a very strong Q2. Preliminary consumer sentiment index from

University of Michigan for August is also due on Friday. We expect it to stay around

its current level at 90, which is a relatively high level suggesting that US consumers

are still optimistic.

The Fed’s Labour Market Condition Index has attracted some attention recently as it

has declined every month this year so far. On Monday we find out whether the

declining trend continued in July. However, notice that Yellen has said that it is only

an experimental index so one should probably not put too much weight on it. Weekly

jobless claims data are due on Thursday.

So far no Fed speeches are scheduled next week so we have to wait a little longer

before we get to know why the Fed included a sentence that ‘near-term risks have

diminished’ in the statement from the last FOMC meeting.

The euro area next week is very thin in terms of data releases. Most interesting is the

release of Sentix Investor Confidence which will be examined to gain additional

information about the impact on the euro area from the UK’s decision to leave EU.

The figure dropped in July, but the weakness in investor sentiment (also seen in ZEW

expectations) has only had limited impact on economic sentiment (both PMI and Ifo

expectations have been fairly resilient). In our view it is early days and a long period

of negotiations may drag out the uncertainty thus resulting in lower investments. Note

that a survey from the European Commission showed unchanged support for the euro

before the Brexit-vote, see Unchanged support for the euro before Brexit but

optimism about EU’s future is lower, 1 August 2016.

The second release of euro area GDP growth in Q2 is due for release together with the

first release of the German figure. The first estimate for the euro area showed

economic growth at 0.3% q/q and 1.6% y/y, which is still higher than the potential

growth rate of the euro area. Domestic demand has been the main driver of GDP

growth in recent years, but the higher oil price during Q2 is likely to have been a

headwind to private consumption, see Flash Comment – Euro area: higher inflation,

activity data are pre-Brexit, 29 July 2016.

Euro area and German industrial production in June are also set to be released. In line

with the GDP figures mentioned above, the industrial production covers the period

before the Brexit-vote, implying they will attract less attention.

During the Summer, the European Commission recommended cancelling the fines for

Spain and Portugal despite their lack of effective action to correct excessive deficits,

see From strict EU fiscal rules to growth-supportive policies despite high public debt

ratios, 3 August 2016.

We expect strong retail sales

continued in July

Source: Census

Sentix will be followed to get more info

about the impact of the Brexit-vote

Source: Ifo, Markit PMI, Sentix, ZEW

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In the UK, focus continues to be on the economic impact of UK’s EU vote. So far,

most post-Brexit survey data have been very weak, indicating that the UK economy is

heading for a recession in the second half of the year. This also explains why the

Bank of England announced a substantial easing package yesterday, see also Bank of

England Review However, it is still early on as the EU vote took place only one and a

half month ago and no ‘hard’ data have been released yet. The most important release

is the NIESR GDP estimate for July on Tuesday, which usually is a good indicator for

actual GDP growth. It is likely that it will show that economic activity has declined

significantly after Brexit in line with the PMI’s for July. Also the RICS housing

market survey for July due on Thursday will attract attention as the June survey

indicated a sharp decline in both housing market activity and prices in June. Usually

the RICS survey is a quite good indicator, see also chart to the right. Less important

are data for British Retail Consortium (BRC) sales in July, which are due on Monday.

Normally this is not an important indicator but since the official ‘hard’ economic data

are lagging, markets and analysts are analysing whatever information they can get.

Production and construction data for June (due on Tuesday and Friday, respectively)

will give us information about whether to expect revisions to the first estimate of Q2

GDP growth, which came out pretty strong at 0.6% q/q.

The coming week will be busy in terms of Chinese releases. The trade balance

(Monday) will give some input on the strength of exports. The external sector has

seen a big tailwind from a 10% depreciation of the trade weighted CNY over the past

year and moderate pick-up in the US. However, note that the data are quite volatile

and not a good gauge of underlying activity. CPI and PPI (Tuesday) are expected to

show unchanged CPI inflation at 1.9% y/y and clearly below the 3% target. PPI

inflation has increased over the past months pushed up by higher commodity prices.

We look for a further rise in PPI inflation to -1.8% in July from -2.6% y/y in June.

The week is rounded off on Friday with data for industrial production and retail sales.

Industrial production growth is expected to continue broadly sideways just above 6%

y/y while retail sales should increase around 10.5% y/y.

Most recent RICS survey indicated a

sharp decline in the housing market

Source: Land Registry, Nationwide, Halifax, RICS

China: industrial production growth

hovering around 6%

Source: Macrobond Financial

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Scandi

In Denmark the statistical office will release the consumer price index for July on

Wednesday. After dipping right down to zero in the spring, inflation climbed to 0.3%

y/y in June, and we still expect it to rise in the coming months, although much

depends on oil prices. We predict a rate of 0.2% y/y in July, slightly down from June

due to a drop in fuel prices outweighing the upward pressure from base effects.

Tuesday brings figures for the current account and exports in June. Exports struggled

last year but got off to an excellent start in Q1, so it will be interesting to learn

whether this trend continued in June. Monday has figures for industrial production in

June. Industrial production has looked solid so far this year, and it will be exciting to

see if this continues.

In Sweden, July inflation is released next week and we expect to see both CPIF and

CPIF excluding Energy 0.2pp below the Riksbank’s forecasts. From there on we see a

quite different path than the Riksbank with a gradual widening of our forecasts. In our

view the inflation trend has turned down after peaking in H1. Our long-standing view

is that 1) domestic price pressure is contained by low wage costs – only rising due to

repeated tax hikes (alcohol, tobacco and energy taxes, congestion charges and reduced

ROT renovation subsidy) over the past years and 2) import prices are falling again as

the SEK no longer depreciates on a trend basis. There is also a downside risk related

to oil: it appears as if the pattern seen in the past two years is repeated, i.e. implying

lower prices in the fall.

In Norway the statistical office will be releasing consumer prices for July. The June

figures surprised to the upside, due mainly to higher food prices. We reckon that part

of this increase is permanent and will not reverse in the July figures. On the other

hand, we have the impression that fashion retailers began their summer sales earlier

than usual, which may pull the annual rate down slightly. The big question, though, is

how the change in tourist flows (more foreign and Norwegian tourists holidaying in

Norway) will impact prices for goods and services in July. We forecast core inflation

of 0.1% m/m and 3.1% y/y in July. This would mean that inflation over the past

couple of months has been 0.2-0.3pp higher than Norges Bank assumed in the June

monetary policy report. Along with better data in general and a tight housing market,

this may further fuel uncertainty about the interest rate decision in September.

Inflation still record-low

Source: Statistics Denmark

Diverging inflation views

Source: Riksbank, Danske Bank

Inflation is still high

Source: Statistics Norway

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Market movers ahead

Source: Bloomberg, Danske Bank Markets

Global movers Event Period Danske Consensus Previous

Mon 08-Aug 10:30 EUR Sentix Investor Confidence Index Aug 2.5 3.6 1.7

Tue 09-Aug 3:30 CNY PPI y/y Jul -1.8% -2.0% -2.6%

3:30 CNY CPI y/y Jul 1.9% 1.8% 1.9%

12:00 USD NFIB small business optimism Index Jul 94.5 94.5

14:30 USD Unit labour cost, preliminary q/q 2nd quarter 1.8% 4.5%

Wed 10-Aug 23:00 NZD Reserve Bank of New Zealand (cash rate decision) % 2.0% 2.0% 2.3%

Fri 12-Aug 4:00 CNY Industrial production y/y Jul 6.2% 6.2%

4:00 CNY Retail sales y/y Jul 10.5% 10.6%

14:30 USD Retail sales control group m/m Jul 0.3% 0.4% 0.5%

16:00 USD University of Michigan Confidence, preliminary Index Aug 91 91.3 90.0

Scandi movers

Wed 10-Aug 8:00 SEK Prospera inflation expectations

9:00 DKK CPI m/m|y/y Jul -0.2%|0.2% 0.1%|0.3%

9:30 SEK Industrial production s.a. m/m|y/y Jun -0.8%|1.7%

9:30 SEK Service production m/m|y/y Jun -0.1%|5.4%

10:00 NOK Core inflation(CPI-ATE) m/m|y/y Jul 0.1%|3.1% 0.3%|3.0%

Thurs 11-Aug 8:00 SEK PES unemployment % Jul 3.8%

9:30 SEK Underlying inflation CPIF m/m|y/y Jul -0.2%|1.1% -0.1%|1.2% 0.1%|1.5%

6 | 5 August 2016 www.danskeresearch.com

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Global Macro and Market Themes

Central bank fatigue gives way to fiscal stimulus

The focus is turning to fiscal stimulus

In the quiet lull of the summer haze we have seen a dramatic turn of events on the

global economic scene: first the Brexit shock and now in recent weeks the rebirth of

fiscal stimulus as a way to fight the global low growth, low inflation nexus. While the

Brexit shock has been covered at length, the re-opening of the fiscal toolbox poses

interesting questions for the markets, especially in view of the already high public debt

levels seen in many advanced economies.

The newfound interest in using fiscal means should not come as a surprise.

Following a period of aggressive monetary easing, there has lately been a growing chorus

stressing that central banks alone cannot lift the global economy out of a weak growth

scenario arising from concerns that the monetary transmission mechanism has become

ineffective in translating monetary expansions into higher real GDP growth (for

discussion see for example our note EM rally, helicopter money and central bank fatigue,

21 April 2016).

Leading international organisations such as the IMF and OECD have over the

course of the spring become increasingly vocal in calling for pro-growth fiscal

expansions and structural reforms as supplements to central bank easing. In its most

recent note ahead of the G20 finance ministers and central bank governors meeting in

China 23-24 July, the IMF stressed that ‘where monetary policy space is narrowing and

there is fiscal space, fiscal policy can help support demand and close output gaps—

including through measures that will strengthen growth also in the medium and long term

(e.g., Canada, Korea) or, where necessary, facilitate balance sheet repair’. The OECD has

been advocating targeted public investment programmes in response to sluggish growth

prospects in most of its member countries. It estimates that high quality public investment

can lift growth significantly, which will more than compensate the possible higher

borrowing requirement.

So are policymakers starting to take on this advice?

Chart 1: OECD estimates of first year effects of a ½ per cent of GDP

public investment stimulus by all OECD economies

Source: OECD Interim Economic Outlook, February 2016

Today’s key points

The focus has lately been turning

to fiscal stimulus to supplement

central bank actions

Japan took action in late July while

the EU is relaxing its fiscal rule

framework in favour of looser

fiscal policies

In the UK and US policymakers are

also indicating their intention to

use fiscal policies to lift growth

prospects

Equity markets will be positively

affected by fiscal easing

In the current environment of

highly accommodative monetary

policies, the initial impact on

interest rates should also be fairly

limited

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Policymakers in major countries now committing to fiscal

expansions

Over the past couple of weeks we have seen direct fiscal actions (Japan) or

intentions to loosen fiscal policies (US). In the euro area, the loosening has so far

been more indirect in allowing a laxer interpretation of the fiscal rule framework.

More concretely:

Japan: The Prime Minister approved a government stimulus package totalling

JPY28trn over several years, which includes new spending of JPY7.5trn (1.4% of

GDP). The fiscal package complements another round of monetary expansion

approved by the BoJ on 29 July, which was seen, however, as a disappointment by

markets which had hoped the central bank would boost the pace of JGB purchases or

lower the policy rate (please see BoJ Review: BoJ disappoints but keeps door open for

more easing, 29 July 2016).

Euro area: Our eurozone expert Pernille Bomholdt Henneberg this week sent out a

piece providing an overview of the recent changes in the fiscal setup in Europe

(please see From strict EU fiscal rules to growth-supportive policies despite high

public debt ratios, 3 August 2016). The most prominent change of course was the

European Commission recommending cancelling the fines for Spain and Portugal

despite their lack of effective action to correct excessive deficits. This sends an

important signal of more lenience towards divergence from EU fiscal rules. In

addition, the deadline for several member countries for correction of excessive

deficits has been extended, including France and the Netherlands. Overall, the fiscal

stance in the euro area is set to be growth supportive again in 2016-17 following a

period when the euro area was faced with a significant fiscal headwind (see Chart 2).

UK: In welcoming the new easing package by the Bank of England, the new

Chancellor of the Exchequer, Phillip Hammond, said that he is prepared to take any

step to support the economy. So we think it is likely that the easing measures from the

BoE will be supported a by more expansionary fiscal policy when Hammond presents

the next budget later this year (see our Bank of England review Easing package, more

to follow in November, 4 August 2016).

US: In their convention speeches, both president candidates Trump and Clinton

highlighted the need for big public investment plans to reinvigorate US growth

potential. Hence we think that a fiscal expansion in the US in 2017 on the back of the

presidential election is likely, especially if US growth continues to be relatively

sluggish.

Hence, more aggressive use of fiscal expansions may well become increasingly important

over the course of the next 12 months if global growth continues disappoint. The

question for investors is what the possible impact such actions will have on bond,

equity and FX markets.

Chart 2: Small fiscal tailwind in both

2016 and 2017 in the Euro area

Source: European Commission (forecast), Danske

Bank Markets

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What could the market implications of looser fiscal policy be?

There is a large literature on the impact of fiscal spending on economic growth and

financial markets. It is outside the scope of this note to discuss these factors in detail,

but below we will outline the key factors and possible effects on financial markets in

today’s economic situation with high public debt ratios and very low interest rates on

public debt. A lot depends on how credible, sustainable the fiscal package is perceived by

the markets. In addition, the interplay with monetary policies is also important as

concurrent monetary easing can help keep a lid on government borrowing costs.

Key arguments against fiscal easing are the already high public debt levels and

substantial declines in unemployment rates in most advanced countries. Since the

financial crisis public debt has increased from around 70% of GDP to over 100% of GDP

(see chart 3). So in theory the fiscal space to embark on further fiscal easing is limited.

However, low interest rates mean that the cost of servicing the debt is in most cases at, or

close to record lows. Even in Japan, the cost of servicing public debt accounts for less

than 2% of national income. This is lower than in the 1980s at a time when its debt ratio

was only 70% compared to over 220% today. Perhaps a more salient argument is also the

fact that the unemployment rate has been declining in the major economies for years and

is probably not far away from structural levels. Hence policy makers in these countries

could soon have to tighten fiscal policies.

So what will be the impact of fiscal easing on financial markets? There is no doubt

that a coordinated fiscal easing will be perceived positively by equity markets as stronger

real demand will support earning growth. What about the interest rates? Given the highly

accommodating monetary policies in advanced economies the impact on interest rates

will probably be fairly limited at least in the short run. A case in point is the development

in Japanese yields over the past week. Although they increased somewhat following the

announcement of the fiscal package, some of the increase was also caused by

disappointment on the BoJ side. Moreover, yields are still in negative territory and the

yield curve only steepened very modestly. On FX markets, the traditional macroeconomic

model would suggest that a fiscal easing should lead to a stronger currency as higher

interest rates generate capital inflows. However, over time some of the additional demand

will give rise to higher imports and hence mitigate some of the currency strength. If all

countries pursue looser fiscal policies in a coordinated manner, the impact on the crosses

should be less pronounced.

Chart 3. Public debt in advanced

economies has surged since the

financial crisis

Source: IMF world economic outlook database

10-year Japanese government yields

have increased after the latest

packages

Source: Macrobond Financial

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Global market views

Source: Danske Bank Markets

Asset class Main factors

Equities

Short term: sell on rallies

M edium term: moderately positive Underweight Europe

Overweight US

Underweight Japan

Bond market

Core yields: Low for even longer with increased uncertainty We expect the ECB wil pro long the QE programme another six months

US-euro spread: wider but not before we see Fed hikes Fed on hold until 2017

Peripheral spreads: ECB support QE buying and hunt for yield means further performance

Credit spreads: neutral ECB keeping spreads contained

FX

EUR/USD - Lower near-term on European uncertainty, then higher Valuations and CA differential support cross in the medium- to long term; short-term downside risks from EU risks

EUR/GBP - Further GBP weakness in next few months BoE monetary easing and financial account flows to send cross higher

USD/JPY - Risks skewed to downside BoJ easing limiting downside potential stemming from fundamentals and relative current account flows

EUR/SEK - To move gradually lower over coming months To move lower on relative fundamentals, valuation and natural domestic sellers returning post summer-lull

EUR/NOK - range short-term then lower Global factors, o il price end Norges Bank to keep cross in range in coming months, then lower on valuation and fundamentals

Commodities

Oil price – Consolidation in US oil sector leading to recovery OPEC has lost leverage over o il price; sliding dollar and supply disruption have added support recently

M etal prices – Positive outlook anticipating recovery in Chinese construction Consolidation in mining industry puts a floor under prices, awaiting support from higher global economic growth

Gold price – Bouncing on re-pricing of Fed and other major central banks Brexit risk safe haven flows and more dovish major central banks support demand for gold

Agriculturals – Support from disruptive weather, higher o il price Attention has turned to La Niña weather risks in H2 16.

Tactical overweight emerging markets vs. developed markets-->growth prospecst stronger in EM than in DM and thereby

higher earning growth

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Scandi update

Denmark – Brexit fails to trigger currency flight to Denmark

An otherwise quiet week saw the Nationalbank release July currency reserves data

showing that the UK’s vote to leave the EU did not spark the influx of currency into

Denmark that some had predicted. The reserves actually fell DKK2.4bn, which has to

count as a fairly minor change. The period leading up to the vote brought a substantial

inflow of currency but this did not balloon following the result of the referendum – quite

the opposite. There is therefore no prospect of Nationalbank needing to cut interest rates

to avoid an overly strong krone.

The week also brought jobless figures for June, showing a decrease of 1,500 people,

which translates into an unchanged unemployment rate of 4.2%. Unemployment has been

coming down since mid-2012 but the Brexit vote means that we could be facing a period

of economic decline and, therefore, substantially reduced, or even zero, job growth in

coming months.

Sweden – SEKset to take back most of its summer losses

The Swedish krona has seen some terrible weeks (while many of us have had a well-

deserved vacation), with EURSEK revisiting post-Brexit peaks around 9.60. It is not

entirely clear why.

We argue that it is not due to the repricing of relative (the ECB versus the Riksbank)

monetary policy. It is true that Swedish short rates have outperformed the eurozone but

this is due to liquidity and factors related to the upcoming US money-market reform

rather than any monetary policy considerations. Nor is it related to risk sentiment; the

normally strong negative correlation between equities (which have rebounded strongly)

and EUR/SEK would suggest the latter should be trading around 9.30-9.35.

Yes, there have been a couple of disappointing macro releases, such as Q2 GDP, but this

in itself does not explain why the krona should have taken such a hard hit (macro has

been weak elsewhere too). We would not put too much emphasis on any house market

concerns as a driver behind the collapse in the Swedish currency. So, what is it? We

believe that the normal summer lull is to blame, where ‘natural SEK buyers’ have been

absent (on vacation), both commercial interests stemming from exporters and rebalancing

needs stemming from financial institutions (which would need to buy SEK, as foreign

assets have increased in value).

In our view, pent-up demand from these ‘natural SEK buyers’, together with strong

economic fundamentals where the krona is substantially undervalued versus the euro and

US dollar and where the Swedish growth outlook, while moderating, remains strong on a

relative basis, will help the krona to take back most of its summer losses in the weeks to

come.

Currency reserves unchanged in July

Source: Danmarks Nationalbank

Breakdown of correlation – likely to be

a temporary summer phenomenon

Source: Macrobond Financial, Danske Bank

Markets

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Norway – brighter growth outlook

Data over the summer has largely confirmed our view that activity is picking up as the

headwinds from the oil industry ease and growth in government demand and housing

investment accelerate. Leading indicators now point to growth in industrial activity in Q2

for the first time since 2014. The jobless data also shows that unemployment has now

stabilised and even begun to edge down. This may mean that demand as a whole is now

picking up. Housing prices have also risen surprisingly quickly over the past two months

and homebuilding is accelerating further. It may therefore seem that the risk of a more

severe and persistent downturn is now receding, and growth is normalising. On the other

hand, we still expect a weaker growth contribution from Europe following Brexit, and oil

prices have fallen again. It is therefore still likely that Norges Bank will cut interest rates

by 25bp at its September meeting but the probability of this has decreased somewhat over

the past month.

Industry over the worst

Source: Macrobond Financial, Danske Bank

Markets

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Latest research from Danske Bank Markets

4/8 Bank of England review: easing package, more to follow in November

As expected the Bank of England (BoE) delivered a substantial easing package today

3/8 From strict EU fiscal rules to growth-supportive policies despite high public debt

ratios

High government debt no longer rules out fiscal policy easing, as EU member states and

authorities are now paying more attention to counter-cyclical fiscal policy than fiscal

sustainability considerations.

2/8 US Labour Market Monitor: July report set to attract much attention as both

employment and growth have slowed in 2016

Jobs report preview. Fed on hold for the rest of the year.

1/8 Unchanged support for the euro before Brexit but optimism about EU's future is

lower

The European Commission’s Spring Eurobarometer survey shows unchanged support for

the euro as a common currency.

1/8 Euro-area banking stress test better than feared

The euro-area banking stress test was better than feared

29/7 Euro area: higher inflation, activity data are pre-Brexit

Euro area HICP inflation was slightly higher than expected in July as it increased to 0.2%

y/y from 0.1% y/y in June (consensus 0.1%).

29/7 BoJ Review: BoJ disappoints but keeps door open for more easing

The Bank of Japan (BoJ) is increasing its purchases of ETFs but has kept the policy

interest rate and bond purchase programme unchanged at -0.1% and JPY80trn,

respectively

27/7 Research: Is Chinese growth slowing down again?

Chinese economic indicators have been mixed lately with some pointing to softer growth.

However, we do not look for a renewed slowdown but rather a muddle-through scenario

in H2.

13 | 5 August 2016 www.danskeresearch.com

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Macroeconomic forecast

Source: OECD and Danske Bank. 1) % y/y. 2) % contribution to GDP growth. 3) % of labour force. 4) % of GDP.

Macro forecast, Scandinavia

Denmark 2015 1.0 2.3 -0.7 1.1 -0.3 0.3 0.0 0.5 4.6 -2.1 40.2 7.02016 0.7 1.9 0.5 1.1 0.1 0.7 1.7 0.5 4.3 -1.7 39.3 6.82017 1.0 1.9 0.5 0.9 0.1 2.6 3.5 1.3 4.3 -1.4 39.2 6.9

Sweden 2015 4.2 2.7 2.6 7.0 0.1 5.9 5.5 0.0 7.4 -0.3 43.4 4.92016 2.6 3.0 3.2 4.6 0.0 1.4 4.1 0.8 7.1 -0.4 41.5 5.02017 1.4 1.6 2.0 -0.3 -0.1 2.0 2.3 0.6 7.2 -1.5 41.7 5.2

Norway 2015 1.0 2.0 1.9 -4.2 0.3 3.4 1.1 2.1 3.0 - - -2016 0.9 1.5 3.0 -1.6 0.0 0.8 0.9 3.1 3.4 - - -2017 1.9 2.2 3.1 0.9 -0.2 0.9 2.2 2.8 3.5 - - -

Macro forecast, Euroland

Euroland 2015 1.6 1.7 1.3 2.7 - 5.1 5.9 0.0 10.9 -2.1 90.7 3.62016 1.2 1.5 1.5 1.7 - 2.7 4.0 0.3 10.3 -2.0 90.2 3.72017 0.7 0.9 1.2 -0.7 - 3.2 3.3 1.3 10.3 -1.8 89.8 3.6

Germany 2015 1.4 2.0 2.5 1.6 - 4.8 5.4 0.1 4.6 0.7 71.2 8.82016 1.2 1.6 2.2 2.0 - 2.2 4.0 0.4 4.4 0.2 68.6 8.52017 1.0 1.2 1.4 -0.3 - 3.3 3.6 1.6 4.5 0.0 66.5 8.3

France 2015 1.2 1.5 1.4 0.9 - 6.0 6.4 0.1 10.4 -3.5 95.8 -1.52016 1.2 1.6 1.3 1.8 - 1.9 4.6 0.5 10.2 -3.5 96.5 -1.12017 0.3 0.7 1.0 -0.8 - 3.0 3.3 1.4 10.3 -3.4 97.5 -1.0

Italy 2015 0.6 0.9 -0.7 0.6 - 4.1 5.8 0.1 11.9 -2.6 132.7 2.22016 0.6 1.1 0.9 0.8 - 0.1 1.3 0.1 11.8 -2.6 132.9 2.42017 0.4 0.6 0.7 -0.6 - 3.2 3.3 1.4 11.5 -2.3 132.5 2.3

Spain 2015 3.2 3.1 2.7 6.4 - 5.4 7.5 -0.6 22.1 -5.1 99.2 1.42016 2.4 2.8 2.1 2.8 - 2.4 4.0 -0.2 20.3 -4.0 100.5 1.52017 1.1 1.4 1.3 0.3 - 2.9 3.2 1.7 19.0 -3.5 100.0 1.3

Finland 2015 0.7 1.4 -0.9 -1.4 - 0.6 -0.4 -0.2 9.4 -2.8 63.0 0.12016 0.8 1.1 0.0 2.5 - -1.0 0.0 0.4 9.2 -2.9 65.9 0.22017 0.5 0.5 -0.5 1.5 - 2.0 1.5 0.5 9.0 -2.8 68.6 0.2

Macro forecast, Global

USA 2015 2.4 3.1 0.7 4.0 0.2 1.1 4.9 0.1 5.3 -2.6 105 -2.72016 1.7 2.7 0.9 0.6 -0.2 0.3 0.9 1.4 4.8 -2.9 105 -2.92017 1.9 2.3 0.8 2.3 0.0 2.4 2.8 2.5 4.6 -2.8 103 -3.3

China 2015 6.8 - - - - - - 1.7 4.2 -0.8 41.8 2.42016 6.7 - - - - - - 2.3 4.2 -0.8 42.8 2.32017 6.6 - - - - - - 2.0 4.3 -1.0 43.5 2.5

UK 2015 2.2 2.6 1.4 3.3 0.3 4.8 5.8 0.1 5.4 -5.0 87.4 -5.22016 1.1 2.3 1.2 -2.9 0.2 2.6 3.0 0.8 5.2 -3.9 88.9 -5.52017 -0.4 0.5 0.2 -3.4 0.0 2.0 2.4 2.4 5.6 -2.9 88.3 -5.2

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

14 | 5 August 2016 www.danskeresearch.com

Weekly Focus

Financial forecast

Source: Danske Bank Markets

Bond and money marketsCurrency

vs USDCurrency

vsSEK

USD 05-Aug - 851.8

+3m - 869.2

+6m - 836.4+12m - 798.2

EUR 05-Aug 111.4 949.0

+3m 107.0 930.0

+6m 110.0 920.0+12m 114.0 910.0

JPY 05-Aug 101.1 8.43

+3m 107.0 8.12

+6m 108.0 7.74+12m 108.0 7.39

GBP 05-Aug 131.3 1118.2

+3m 121.6 1056.8

+6m 122.2 1022.2+12m 129.5 1034.1

CHF 05-Aug 97.3 875.1

+3m 100.0 869.2

+6m 100.0 836.4+12m 99.1 805.3

DKK 05-Aug 667.6 127.6

+3m 695.1 125.0

+6m 676.1 123.7+12m 652.4 122.4

SEK 05-Aug 851.8 100.0

+3m 869.2 -

+6m 836.4 -+12m 798.2 -

NOK 05-Aug 843.4 101.0

+3m 878.5 98.9

+6m 836.4 100.0+12m 789.5 101.1

Equity markets

Regional

Pris trend12 mdr.

Regionale rekommen-dationer

USA (USD) Strong domestic demand, USD weakening 0-5% Overweight

Emerging markets (lokal valuta) Commodities and China stabilising 0-5% Overweight

Japan Stronger JPY, weak earnings outlook 0-3% Underweight

Europa (ex. Norden) ECB monetary easing, weaker GDP growth 0-3% UnderweightNorden Earnings growth, expensive valutaion 0-5% Overweight

Commodities

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017

NYMEX WTI 34 46 49 50 52 54 56 58 45 55

ICE Brent 35 47 49 50 52 54 56 58 45 55

Copper 4,672 4,731 5,000 5,100 5,200 5,300 5,400 5,500 4,876 5,350

Zinc 1,687 1,930 2,150 2,150 2,150 2,150 2,100 2,100 1,979 2,125

Nickel 8,537 8,885 10,500 ### 10,900 11,100 11,300 11,500 9,655 11,200

Aluminium 1,516 1,584 1,650 1,750 1,800 1,850 1,900 1,950 1,625 1,875

Gold 1,183 1,260 1,325 1,325 1,300 1,275 1,250 1,225 1,273 1,263

Matif Mill Wheat 157 159 154 158 161 159 159 159 157 160

Rapeseed 359 370 380 390 400 400 400 400 375 400

CBOT Wheat 466 470 450 475 500 510 520 530 465 515CBOT Corn 363 391 380 390 400 410 415 420 381 411

CBOT Soybeans 881 1,059 1,175 1,175 1,175 1,150 1,125 1,100 1,072 1,138

Medium -3 -+3%

Medium -3 -+3%

High -3 -+3%

High -5 -+5%

High -5 -+5%

410331

1,000

41

43

4,897

2,205

10,695

1,609

359

2016 2017 Average

05-Aug

1,336

166

Risiko profil3 mdr.

Pris trend3 mdr.

0.00 0.40 0.75 1.45 900.0

0.25 0.70 0.85 1.30 940.0

0.00 0.45 0.75 1.40 920.0

-0.50 -0.50 -0.40 0.70 910.0

0.50 1.10 1.04 1.36 939.7

-0.50 -0.50 -0.45 0.65 930.0

-0.50 -0.50 -0.45 0.65 920.0

0.05 -0.14 0.00 0.84 743.8

-0.50 -0.59 -0.48 0.63 949.0

0.05 -0.20 -0.02 0.71 743.8

0.05 -0.16 0.00 0.74 743.8

-0.75 - - - 113.0

0.05 -0.19 -0.01 0.57 743.8

-0.75 - - - 107.0

-0.75 - - - 110.0

0.10 0.10 0.55 1.05 88.0

-0.75 -0.75 -0.73 -0.34 108.4

0.10 0.09 0.42 0.97 88.0

0.10 0.09 0.45 1.00 90.0

-0.10 - - - 123.1

0.25 0.49 0.39 0.77 84.9

-0.10 - - - 114.5

-0.10 - - - 118.8

0.00 -0.30 -0.20 0.55 -

-0.10 -0.01 -0.06 0.05 112.6

0.00 -0.30 -0.22 0.42 -

0.00 -0.30 -0.20 0.45 -

0.75 0.94 1.05 1.75 114.0

0.00 -0.30 -0.22 0.28 -

0.50 0.63 0.85 1.50 107.0

0.50 0.64 0.95 1.60 110.0

Key int.rate

3m interest rate 2-yr swap yield 10-yr swap yieldCurrency

vs EUR

0.50 0.78 0.92 1.39 111.4

15 | 5 August 2016 www.danskeresearch.com

We

ekly Focu

s

Weekly Focus

Calendar

Calendar

Source: Danske Bank Markets

Continued

Source: Danske Bank Markets

Calendar

Source: Danske Bank Markets

Continued

Source: Danske Bank Markets

Source: Danske Bank Markets

Key Data and Events in Week 32

During the week Period Danske Bank Consensus Previous

Sun 07 CNY Foreign exchange reserves bn. USD Jul 3200 3205.2

Mon 08 CNY Exports y/y Jul -3.5% -4.8%

Mon 08 CNY Imports y/y Jul -7.0% -8.4%

Mon 08 CNY Trade balance USD bn Jul 47.3 48.1

Monday, August 8, 2016 Period Danske Bank Consensus Previous

- CNY Trade balance USD bn Jul 47.3 48.1

- CNY Imports y/y Jul -7.0% -8.4%

- CNY Exports y/y Jul -3.5% -4.8%

1:50 JPY Bank lending y/y Jul 2.0%

7:00 JPY Eco Watchers Survey Outlook (Current) Index Jul 42.0 41.5|41.2

8:00 DEM Industrial production m/m|y/y Jun 0.7%|… 0.9%|0.6% -1.3%|-0.4%

9:00 DKK Industrial production m/m Jun 1.0%

9:15 CHF CPI m/m|y/y Jul -0.5%|-0.3% 0.1%|-0.4%

10:30 EUR Sentix Investor Confidence Index Aug 2.5 3.6 1.7

16:00 USD Fed's LMCI m/m Jul

16:00 USD Construction spending m/m Jun 0.5% -0.8%

Tuesday, August 9, 2016 Period Danske Bank Consensus Previous

1:50 JPY Money supply M2 y/y Jul 3.3% 3.4%

3:30 CNY PPI y/y Jul -1.8% -2.0% -2.6%

3:30 CNY CPI y/y Jul 1.9% 1.8% 1.9%

3:30 AUD NAB Business Conditions Index Jul 12.0

7:45 CHF Unemployment % Jul 3.3% 3.3%

8:00 DEM Trade balance EUR bn Jun 23.9 21

9:00 DKK Trade balance ex ships DKK bn Jun 5.5

9:00 DKK Exports m/m Jun

9:00 DKK Current account (nsa|sa) DKK bn Jun 10.5|7.9

10:00 NOK Credit indicator (C2) y/y Jun 4.8%

10:30 GBP Industrial production m/m|y/y Jun 0.0%|1.6% -0.5%|1.4%

10:30 GBP Manufacturing production m/m|y/y Jun -0.2%|1.3% -0.5%|1.7%

10:30 GBP Trade balance GBP mio. Jun -2550 -2263

12:00 USD NFIB small business optimism Index Jul 94.5 94.5

14:30 USD Unit labour cost, preliminary q/q 2nd quarter 1.8% 4.5%

16:00 GBP NIESR GDP estimate q/q Jul 0.4% 0.6%

Wednesday, August 10, 2016 Period Danske Bank Consensus Previous

- CNY Money supply M2 y/y Jul 11.0% 11.8%

- CNY New Yuan loans CNY bn. Jul 900 1380

- CNY Aggregate financing bn CNY Jul 1024 1629.3

1:50 JPY PPI m/m|y/y Jul -0.1%|-4.0% -0.1%|-4.2%

1:50 JPY Machine orders m/m|y/y Jun 3.3%|-4.4% -1.4%|-11.7%

2:30 AUD Westpac Consumer Confidence Index (% m/m) Aug 99.1|-3.0%

6:30 JPY Tertiary industry index m/m Jun 0.3% -0.7%

8:00 SEK Prospera inflation expectations

8:45 FRF Industrial production m/m|y/y Jun -0.1%|-0.8% -0.5%|0.5%

9:00 DKK CPI m/m|y/y Jul -0.2%|0.2% 0.1%|0.3%

9:30 SEK Industrial production s.a. m/m|y/y Jun -0.8%|1.7%

9:30 SEK Service production m/m|y/y Jun -0.1%|5.4%

9:30 SEK Industrial orders m/m|y/y Jun 0.0%|-0.5%

10:00 NOK CPI m/m|y/y Jul 0.6%|3.7%

10:00 NOK PPI m/m|y/y Jul 2.8%|-9.7%

10:00 NOK Core inflation(CPI-ATE) m/m|y/y Jul 0.1%|3.1% 0.3%|3.0%

13:00 USD MBA Mortgage Applications % -3.5%

16:30 USD DOE U.S. crude oil inventories K 1413

20:00 USD Budget statement USD bn Jul -129.5 -149.2

23:00 NZD Reserve Bank of New Zealand (cash rate decision) % 2.0% 2.0% 2.3%

16 | 5 August 2016 www.danskeresearch.com

Weekly Fo

cus

Weekly Focus

Calendar — continued

Source: Danske Bank Markets

Thursday, August 11, 2016 Period Danske Bank Consensus Previous

1:01 GBP RICS house price balance Index Jul 0.1 0.2

8:00 SEK PES unemployment % Jul 3.8%

8:45 FRF HICP, final m/m|y/y Jul -0.4%|0.4% -0.4%|0.4%

9:30 SEK Underlying inflation CPIF m/m|y/y Jul -0.2%|1.1% -0.1%|1.2% 0.1%|1.5%

9:30 SEK CPI m/m|y/y Jul -0.2%|0.8% -0.2%|0.8% 0.1%|1.0%

10:00 ITL HICP, final m/m|y/y Jul ...|-0.1% ...|-0.1%

14:30 USD Initial jobless claims 1000 265 269

14:30 USD Import prices m/m|y/y Jul -0.3%|-4.3% 0.2%|-4.8%

Friday, August 12, 2016 Period Danske Bank Consensus Previous

0:45 NZD Retail sales q/q 2nd quarter 1.0% 0.8%

4:00 CNY Fixed assets investments y/y Jul 8.9% 9.0%

4:00 CNY Industrial production y/y Jul 6.2% 6.2%

4:00 CNY Retail sales y/y Jul 10.5% 10.6%

8:00 DEM HICP, final m/m|y/y Jul ...|0.4% 0.4%|0.4% 0.4%|0.4%

8:00 DEM GDP, preliminary q/q|y/y 2nd quarter 0.2%|… 0.3%|1.4% 0.7%|1.6%

9:00 ESP HICP, final m/m|y/y Jul ...|-0.6% …|-0.6% -1.3%|-0.6%

10:00 ITL GDP, preliminary q/q|y/y 2nd quarter 0.2%|… 0.2%|… 0.3%|1.0%

10:30 GBP Construction output m/m|y/y Jun -1.0%|-2.0% -2.1%|-1.9%

10:30 EUR Portugal, GDP, preliminary q/q|y/y 2nd quarter 0.2%|0.9%

11:00 EUR Industrial production m/m|y/y Jun 0.5%|… 0.6%|0.9% -1.2%|0.5%

11:00 EUR GDP, preliminary q/q|y/y 2nd quarter 0.3%|… 0.3%|1.6% 0.3%|1.6%

14:30 USD Retail sales less autos m/m Jul 0.2% 0.7%

14:30 USD Retail sales less autos and gas m/m Jul 0.4% 0.7%

14:30 USD Retail sales m/m Jul 0.4% 0.6%

14:30 USD Retail sales control group m/m Jul 0.3% 0.4% 0.5%

14:30 USD PPI m/m|y/y Jul 0.1%|0.3% 0.5%|0.3%

14:30 USD PPI core m/m|y/y Jul 0.2%|1.2% 0.4%|1.3%

16:00 USD University of Michigan Confidence, preliminary Index Aug 91 91.3 90.0

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

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

17 | 5 August 2016 www.danskeresearch.com

Weekly Fo

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Weekly Focus

Disclosures This research report has been prepared by Danske Bank Markets, a division of Danske Bank A/S (‘Danske

Bank’). The author of this research report is Bjørn Tangaa Sillemann, Analyst.

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