Important disclosures and certifications are contained from page 14 of this report. www.danskeresearch.com

Investment Research — General Market Conditions

Market movers ahead

In the US, we are due to see several important data releases ahead of the Fed’s September

meeting as we approach the unofficial FOMC ‘silence period’. In particular, we expect a

decent retail sales report to suggest that the disappointing July release was only a bump in

the road. In this respect, consumer confidence figures from the University of Michigan

should also shed more light on the state of the consumer. Finally, we expect the

manufacturing sector to attract attention with several relevant releases due.

The UK has quite a busy week ahead. The most important event is the Bank of England

meeting on Thursday. This is one of the small meetings without an Inflation Report and a

press conference. We do not expect any policy changes at this meeting but we plan to read

the minutes carefully for any signs of BoE easing later this year. Otherwise, next week’s

labour market report, CPI inflation print and retails sales are important.

In the euro area, we are due to get both the labour market report and the German ZEW

expectations. We expect decent prints for both releases.

In China, money and credit growth, industrial production, retail sales and fixed asset

investment should give us more insight into the state of the Chinese economy.

In the Scandies, focus is primarily on the important Regional Network Survey in Norway,

which we expect to indicate an improved growth outlook, albeit from weak levels. In

Denmark and Sweden, focus is primarily on the monthly inflation print.

Global macro and market themes

The US election could be a major market theme in the autumn.

A Donald Trump win could lead to a ballooning US public debt level and is likely to be

USD bearish.

Over the medium term, the German bond curve could steepen on ECB inaction.

Softer US data support our call that the Fed will stay on hold this year.

We are bullish on emerging markets on Fed, flows and China news but a Trump win is the risk.

Low July-figures just a bump in road? Worst is over in Norway

Source: Macrobond Fianncial Source: Macrobond Financial

9 September 2016

Editor

Analyst Kristoffer Kjær Lomholt +45 45 12 85 29 klom@danskebank.dk

Weekly Focus

Decisive week for monetary policy outlooks

Contents

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

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

Scandi update ........................................................ 8

Latest research from Danske Bank

Markets ..................................................................... 9

Macroeconomic forecast ........................... 10

Financial forecast ............................................ 11

Calendar ................................................................ 12

Financial views

Source: Danske Bank

Follow us on Twitter for the latest on

macroeconomic and financial market

developments:

@Danske_Research

Major indices

09-Sep 3M 12M

10yr EUR swap 0.31 0.35 0.70

EUR/USD 113 112 118

ICE Brent oil 49 49 54

09-Sep 6M 12-24M

S&P500 2181 -3 -+3% 0-5%

2 | 9 September 2016 www.danskeresearch.com

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Market movers

Global

In the US next week, several important data releases are due out ahead of the Fed’s

September meeting. On Thursday, retail sales figures for August are due out. We estimate

decent growth in core (control group) retail sales of 0.25% m/m but a decline in total retail

sales of 0.3 % m/m due to a large drop in vehicle sales and lower petrol prices in August;

components that are excluded from the control group figures. Retail sales grew strongly in

the spring and early summer, indicating private consumption is still the main growth driver.

In July, core retail sales were more and less unchanged after eight months of positive growth

rates. Although retail sales figures are volatile by nature, it will be key to see whether the

August figures continue to run low or if we see a rebound back to a solid growth rate.

On Thursday, the regional Philly and Empire manufacturing activity indices for September

are due out. After the significant decline in the ISM manufacturing index in August, it will

be important to see if the weakness has continued in September or whether ISM will

rebound. Hence, a lot of attention will be drawn to these early releases on September activity.

Later on Thursday, the industrial production data for August is also due out.

On Friday, the CPI inflation figures for August are due out. We estimate the core index

increased 0.2% m/m in August implying a core inflation rate of 2.3 % y/y. Throughout 2015,

core inflation trended upwards but this year CPI core inflation has been more and less

unchanged. Hence, there is currently no pressure on the Fed from a rising inflation trend.

We estimate the headline index increased 0.1% m/m in August, implying an inflation rate

of 1.0% y/y. Later on Friday, preliminary consumer confidence index data from University

of Michigan for September is due out. We estimate the index increased to 93 in September

from 89.8 in August. Regardless of the type of measure, consumer confidence continues to

be at a high level, suggesting that the consumer part of the economy is strong.

Federal Reserve communication in the next week will be limited to a few speeches in the

coming weekend and on Monday, as we are now entering the unofficial silence period up to

the FOMC meeting on 20-21 September.

In the euro area, German ZEW expectations are due out on Tuesday. The ZEW expectations

saw a rise in August having plunged in July following the Brexit vote and we expect it to

continue rising in September. Financial sentiment is improving, supported by initial resilient

economic figures following the UK’s referendum. Last week, we saw an increase in the

SENTIX investor confidence for the second consecutive month in line with the continued

rise in German DAX, which also supports higher ZEW expectations.

The employment numbers for the euro area are also due to be released on Tuesday. Quarterly

employment growth has been stable at 0.3% for the past three quarters and in Q1 16 total

employment reached its highest level since 2008. Since 2015, employment growth has

remained strong despite only modest GDP growth; we estimate that Q2 employment growth

remained at the 0.3% rate and continued the trend, as GDP growth in Q2 was modest at

0.3%. The relatively strong employment growth despite modest GDP growth reflects the

low potential growth in the euro area where low productivity and a shrinking labour force

are among the factors causing low potential growth.

Low July figures just a bump in the

road?

Source: US Census Bureau

Inflation has trended sideways this

year

Source: BLS, Danske Bank Markets

ZEW expectations likely to follow the

SENTIX increase from last week

Source: Ifo, Sentix, ZEW

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In addition to the employment numbers, labour cost data is also due out on Friday. We expect

labour costs growth to remain moderate despite the continued improving labour market.

Labour costs increased from 1.3% in Q4 15 to 1.7% in Q1 16. In Germany, where

unemployment is historically low, the labour cost figures for Q2 released this week showed

weak wage growth, which should keep the euro figure low as Germany is the country where

the pressure on the labour market should be highest.

On Wednesday, euro area industrial production figures for July are due out. The German

figures were released last week and showed a surprising 1.5% m/m decrease despite

consensus of around an 0.1% increase. Notably, industrial production was down 2.3%

excluding construction and energy. With the German figures we estimate a significant

decrease for the euro area figures.

In the UK, we have a quite busy week ahead. The most important event is the Bank of

England (BoE) meeting on Thursday. This is one of the small meetings without an Inflation

Report and a press conference, so we will only get the policy announcement and the minutes

from the meeting. We do not expect any policy changes; therefore, we expect the BoE to

maintain the Bank Rate at 0.25%, the target for the stock of government bond purchases at

GBP435bn and the target for the stock of corporate bond purchases at GBP10bn. We do not

expect any changes to the new Term Funding Scheme (TFS) either. We will read the minutes

carefully for any signs of whether to expect further BoE easing later this year (most likely

in November). At the August meeting, the minutes stated that ‘a majority of members

expected a further cut in Bank Rate to its effective lower bound […] during the course of the

year’ if incoming data proved broadly consistent with the BoE’s forecast. Here, it is

important to remember that the BoE did not forecast negative growth in the last Inflation

Report but growth around +0.1% q/q in Q3. This means that although most soft indicators

have rebounded in August after sharp falls in July, suggesting that economic growth may

stay positive, it cannot be ruled out that the BoE could ease further this year. However, the

day before yesterday, BoE Governor Mark Carney said that data suggests that the economy

is ‘a bit stronger’ than the latest BoE forecast, which means that the probability of another

rate cut this year is reduced.

Focus continues to be on the economic impact of the UK’s EU vote. We have so far mostly

seen survey indicators about the economic development since June but now the ‘hard data’

begins to tick in. Most notable is the labour market report for July due out on Wednesday.

We estimate the unemployment rate (3M avg.) was unchanged at 4.9% and that the annual

growth in average weekly earnings ex bonuses (3M avg.) declined to 2.1% from 2.3%. As

most headline series are based on three-month averages, focus will be on the details for July

alone. Also, keep an eye on jobless claims for August, which, although fluctuating a lot, may

give us indication about the development in the labour market in August. On Tuesday, CPI

inflation data for August is due out. We believe, in line with the BoE, that inflation will

begin to move up over the next couple of years due to the significant weakening of GBP. In

connection with the inflation data, the official house price data for July is due out. On

Thursday, retail sales for August is due out. Although UK retail sales are very volatile and

only account for less than 6% of GDP, markets usually react to the numbers

In China, data is due out on money and credit growth, industrial production, retail sales and

fixed asset investment over the coming week. We look for the data to confirm a moderate

recovery in China. Fixed asset investment has been on a continued declining path and it will

be interesting to see if there is any sign of stabilisation as many investment projects are

planned.

Unemployment continues to decrease

despite moderate GDP growth

Source: ECB, Eurostat

UK PMIs rebounded in August

suggesting that economic growth may

stay positive despite Brexit

uncertainties

Source: Markit Economics, ONS

Chinese fixed investment weak

despite more planned projects

Source: Macrobond Financial

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Scandi

In Denmark, the statistical office releases inflation figures for August are due out on

Monday. Fuel prices fell during the month, which will have pulled down inflation but food

prices did not climb in July as we had anticipated and so we do not estimate them to have

fallen in August. One surprise could be telephony prices, which plummeted almost 25% in

July and a correction here could push inflation up by as much as 0.2pp. On balance, we

estimate inflation of -0.1% m/m and 0.4% y/y. On Wednesday, the Nationalbank is due to

publish its Q3 Monetary Review, presenting the central bank’s take on where the economy

is at and where it is headed.

In Sweden, the week ahead contains a couple of very interesting outcomes. First due out is

inflation on Tuesday (at 09.30 CEST), where we expect an outcome some way below the

Riksbank’s forecast of where it is expected to remain over the coming months. This is, of

course, one important factor in our expectations of a prolonged QE programme at the

October meeting. When the labour force survey is published on Thursday (at 09.30 CEST),

we will skip the volatile and difficult-to-interpret unemployment rate and look at the more

stable employment numbers. As of yet, we have no reason to expect an absolute weakening

of the employment outlook but we have detected a slight deceleration over the past few

months. Is it just a summer lull or is it something more permanent?

In Norway, the economy performed pretty much as we expected over the summer. The worst

seems to be over and growth is beginning to normalise. We now expect slightly weaker

headwinds from oil-related sectors and further strong growth in most domestic sectors. The

coming week brings the results of the August survey of Norges Bank’s regional network.

Managers’ expectations for the next six months have proved a very good leading indicator

for the Norwegian economy. Since bottoming out in November, the index is on the way up.

We expect further improvements in the growth outlook in construction and mainland

manufacturing and we also expect a brighter growth outlook in the service sector and oil-

related industries to be slightly less negative than in May. The greatest uncertainty concerns

retail trade, where high inflation is most sharply eroding purchasing power. On balance, we

anticipate a further increase in the aggregated output index to around 0.5, which would point

to slightly stronger growth in H2 than Norges Bank assumed in June.

Danish inflation still very low

Source: Statistics Denmark

Plateauing or not?

Source: Macrobond Financial, SCB. Danske Bank

Markets calculations

Worst is over

Source: Macrobond Financial, Danske Bank

Markets

5 | 9 September 2016 www.danskeresearch.com

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Market movers ahead

Source: Bloomberg, Danske Bank Markets

Global movers Event Period Danske Consensus Previous

Tue 13-Sep 4:00 CNY Fixed assets investments y/y Aug 7.9% 8.1%

4:00 CNY Industrial production y/y Aug 6.2% 6.0%

4:00 CNY Retail sales y/y Aug 10.2% 10.2%

11:00 DEM ZEW expectations Index Sep 2.5 2.5 0.5

Wed 14-Sep 10:30 GBP Average weekly earnings ex bonuses (3M) y/y Jul 2.1% 2.2% 2.3%

10:30 GBP Unemployment rate (3M) % Jul 4.9% 4.9% 4.9%

Thurs 15-Sep 9:30 CHF SNB sight deposits -0.75% -0.75% -0.75%

10:30 GBP Retail sales ex fuels m/m|y/y Aug -0.8%|4.8% 1.5%|5.4%

13:00 GBP BoE rate announcement % 0.25% 0.25% 0.25%

13:00 GBP BoE minutes

13:00 GBP BoE government bond purchases (APF) GBP bn Sep 435 435 435

13:00 GBP BoE coporate bond purchases (CBPP) GBP bn Sep 10 10 10

14:30 USD Retail sales control group m/m Aug 0.25% 0.4% 0.0%

14:30 USD Empire Manufacturing PMI Index Sep -1.0 -4.2

14:30 USD Philly manufacturing index Index 1.0 2.0

Fri 16-Sep - EUR EU summit in Bratislava

12:30 RUB Central Bank of Russia rate decision % 10.0% 10.0% 10.5%

14:30 USD CPI - core m/m|y/y Aug 0.2%|2.3% 0.2%|2.3% 0.1%|2.2%

16:00 USD University of Michigan Confidence, preliminary Index Sep 93.0 91.0 89.8

Scandi movers

Mon 12-Sep 9:00 DKK CPI m/m|y/y Aug -0.1%|0.4% 0.0%|0.5% -0.1%|0.3%

Tue 13-Sep 9:30 SEK CPI m/m|y/y Aug -0.2%|1.0% -0.1%|1.2% 0.1%|1.1%

9:30 SEK Underlying inflation CPIF m/m|y/y Aug 0.2%|1.3% 0.0%|1.5% 0.1%|1.4%

10:00 NOK Norges Bank Regional Network Report: Output next 6M Index Aug 0.5 0.28

Wed 14-Sep 8:00 SEK Prospera inflation expectations

10:30 DKK Danish Central Bank publishes Q3 outlook 3rd quarter

6 | 9 September 2016 www.danskeresearch.com

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Global Macro and Market Themes

Politics, ECB inaction and the risk of steeper yield curves

This week, we have had several discussion with clients about the US election. Below are a

couple of take-aways. First, a Donald Trump win could lead to ballooning US public debt level

(See Chart 1) while a Hilary Clinton win, would be a continuation of current fiscal policies.

Second, the US election is likely to lead to a more protectionist US no matter what. A Trump

win could trigger a global trade war while even a Clinton win would lead to more restrictive

trade policies (e.g. NAFTA renegotiation). Finally, actual policies are likely to be more modest

than the current rhetoric from the candidates suggests due to likely resistance from (a possibly

divided) Congress.

Political uncertainty is not just confined to the US. In Europe we have several key political

events coming up, starting with the Italian constitutional referendum in November/December

this year and the most important one being the French Presidential election in April/May 2017.

Marine Le Pen, the National Front leader, has said that she will call an election on EU

membership if she becomes French President. (See Chart 2). Still, most French people do not

want an EU referendum and Marine Le Pen is not the favourite to become the next French

President.

At a glance, markets appear complacent about the political risks as volatility across asset classes

is at record lows. However, as long as political uncertainty does not lead to actual change in

economic policy it may not have much market impact. That is something Brexit, the attempted

but failed coup in Turkey and recent Russian aggression versus the Ukraine have shown us. As

such, we do not believe that political events in Europe will have a major impact on markets as

long as they do not create serious concerns about the future of the EUR. We view a Trump win

as modestly USD negative given his protectionist focus and talk of debt renegotiation.

Historically, Republican presidencies have been more USD bearish than Democrat-led

administrations as GDP growth is typically weaker with Republican presidencies (See Chart 2).

A Clinton win should be slightly USD positive. Moreover, a Trump win would be negative for

Global Head of FICC Research Thomas Harr +4545136731 thhar@danskebank.dk

Key points

The US election could be a major

market theme in the autumn.

A Trump win could lead to

ballooning US public debt level and

is likely to be USD bearish.

Over the medium-term, the

German bond curve could steepen

on ECB inaction.

Softer US data supports our call

that the Fed will stay on hold this

year.

We are an EM bull on the Fed,

flows and China news but a Trump

win is a risk to our view.

Chart 1: US debt levels would rise

sharply with Trump’s fiscal plans

Source: Danske Bank Markets

Chart 2: Republican presidencies are USD bearish

Source: Macrobond Financial

7 | 9 September 2016 www.danskeresearch.com

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LATAM and selective Asian markets given their trade dependence with the US. A Trump win

would also be negative for Poland, Hungary and the Baltic states given possible frictions within

the NATO bloc. On the face of it, a Trump win could lead to upward pressure on US yields

given debt concerns and risks of credit rating downgrades but one should be careful not to

overestimate the impact given the US’s ‘exorbitant privilege’ of owning the world’s reserve

currency.

This week witnessed a ‘wait and see’ ECB and weaker US data. The ECB’s quantitative easing

programme (QE) is facing the challenge that it will run into limits on how many bonds it can

buy of e.g. Germany, compared to its self-imposed restrictions. Interestingly, at its meeting on

Thursday, ECB President Mario Draghi tasked committees to evaluate the options that ensure a

smooth implementation of the bank’s purchase programme.

The ECB maintained its monthly QE purchases of EUR80bn and still intends to end its purchases

in March 2017. In our view, the ECB is still way too optimistic on core CPI. (See Chart 4) and

the ECB will eventually announce an extension of QE to September 2017. The extension

announcement could occur in December when the ECB may also revise its inflation forecasts.

However, we believe that the ECB will do nothing in terms of its restrictions in September or

Q4 ‘16. Over the medium-term, this could lead to a steeper German bond curve as the ECB

shifts from buying German assets to buying those of other countries.

This week’s weak August US ISM non-manufacturing data following the soft ISM

manufacturing index support our view that the Fed will not hike rates at its meeting on 21

September and we still view it most likely that it will also not hike rates in December. This

compares with market pricing a 20% probability of a September hike and an accumulated 64%

probability of a December hike. The most immediate market impact, in our view, is on emerging

markets (EM) with the latest EPFR data showing strong inflows into EM equity and local-

currency debt. In particular, institutional flows favour EM asset classes. The Fed, flows and

recent China data support our positive view on EM equities and currencies. Note that

China’s State Council announced this week it will step up fiscal policy efforts. Policy measures

are likely to include more infrastructure spending – partly to compensate for industrial

restructuring in which zombie companies have started to be shut down. A Donald Trump win

may be the biggest risk for our bullish EM view

Global market views

Source: Danske Bank Markets

Chart 3: Important elections coming

up in France and Germany

Source: Macrobond Financial, Danske Bank

Markets

Chart 4: The ECB is way too optimistic

on core CPI

Source: Macrobond Financial

8 | 9 September 2016 www.danskeresearch.com

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Scandi update

Denmark – Q3 off to a decent start

Last week’s numbers confirmed that the Danish economy had a decent Q2, and this week’s

numbers suggest that it also made a decent start to Q3, with exports of goods unchanged in July

and imports down 2.2%. While this flat growth in exports is far from stellar, it follows a healthy

increase in June and comes despite exports to the UK tumbling more than 5% following the vote

to leave the EU. All in all, therefore, these figures suggest that exports got the Danish economy

off to a good start in Q3. This was confirmed by the July data for industrial production, which

climbed 1.9% m/m to an all-time high. We are now back to the levels seen before the financial

crisis, which suggests that the recovery will continue in Q3.

Sweden – no surprises

With the Riksbank you can never ever be totally confident on what it will decide. However,

thankfully, at the recent meeting, the decision was the expected ‘no change’. Id est, no repo rate

change and no change to its QE programme. Nonetheless, forecasts were revised in a slightly

more cautious direction, with GDP forecasts lowered 0.3 percentage points (pp) to 3.0% y/y for

2016 and 0.1pp for 2017 (to 2.4% y/y). The Riksbank also writes yet another box on how wages

will pick up shortly, which is necessary if its inflation forecast is to materialise. We remain

unimpressed along with employers’ and employees’ organisations it seems (see graph).

Norway – inflation set to come down

Inflation slowed to 3.3% y/y in August, supporting our view that the surprise surge in July was

due largely to transient factors and did not herald a new trend with price-wage spirals sending

inflation through the roof. Quite the opposite, we expect inflation to fall relatively quickly as the

effect of the Norwegian krone’s depreciation recedes and then reverses. Inflation has

nevertheless been somewhat higher than Norges Bank assumed in June and, in isolation, this

will push up the interest rate path at the September meeting. At the same time, industrial

production climbed 3.7% m/m in July, more than cancelling out the drop in June. This greatly

reduces the uncertainty about Norwegian manufacturing and further supports our expectation

that manufacturing activity will rise in H2 as suggested by the PMI. This reduces the downside

risk to the Norwegian economy and probably means that GDP growth will accelerate further

towards the end of the year.

Goods exports held up in July despite

Brexit

Source: Statistics Denmark

It would take about 4% wage growth to

reach the 2% inflation target

Source: Macrobond Financial, Prospera

Currency effect set to reverse

Source: Macrobond Financial, Danske Bank

Markets

9 | 9 September 2016 www.danskeresearch.com

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Latest research from Danske Bank Markets

9/9 China: End to producer deflation good for profits

Producer price deflation has come to an end, supporting profits and thus Chinese equities.

8/9 ECB Review: ECB needs help from committees – again

The ECB kept all policy rates unchanged, maintained its monthly QE purchases of EUR80bn

and still intends to end its purchases in March 2017.

7/9 ECB QE: Buxl/Bund tapering and step up in Ita/Fra/Spa

Our main scenario is that the ECB will ‘do nothing' - causing a ‘de facto’ deviation from the

capital key in Ger/Fin/Por/Ire, while increasing purchases in other countries, according to the

capital key.

5/9 QE Details: QE slowdown to EUR60bn and further out on the curve in Germany

QE purchases were reduced to EUR60bn in August. Looking ahead, we expect QE purchases to

increase to around EUR85bn in the next three months

2/9 16:45 Flash Comment US: Jobs report not strong enough for a September hike

Overall, the jobs report was to the weaker side.

10 | 9 September 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 0.4 4.3 -1.7 39.3 6.82017 1.0 1.9 0.5 0.9 0.1 2.6 3.5 1.2 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 1.5 1.5 1.5 2.4 - 2.7 3.9 0.2 10.2 -2.0 90.2 3.72017 1.0 0.9 1.2 0.9 - 3.2 3.2 1.3 10.0 -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

11 | 9 September 2016 www.danskeresearch.com

Weekly Fo

cus

Weekly Focus

Financial forecast

Source: Danske Bank Markets

Bond and money markets

Currencyvs USD

Currencyvs DKK

USD 09-Sep - 660.3

+3m - 664.3

+6m - 652.4+12m - 630.3

EUR 09-Sep 112.7 744.3

+3m 112.0 744.0

+6m 114.0 743.8+12m 118.0 743.8

JPY 09-Sep 102.2 6.46

+3m 102.0 6.51

+6m 104.0 6.27+12m 104.0 6.06

GBP 09-Sep 133.1 878.8

+3m 124.4 826.7

+6m 120.0 782.9+12m 131.1 826.4

CHF 09-Sep 97.2 679.1

+3m 97.3 682.6

+6m 96.5 676.1+12m 95.8 658.2

DKK 09-Sep 660.3 -

+3m 664.3 -

+6m 652.4 -+12m 630.3 -

SEK 09-Sep 844.2 78.2

+3m 830.4 80.0

+6m 815.8 80.0+12m 771.2 81.7

NOK 09-Sep 820.1 80.5

+3m 830.4 80.0

+6m 798.2 81.7+12m 754.2 83.6

Equity Markets

Regional

Price trend12 mth

Regional recommen-dations

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

Emerging markets (local ccy) Commodities and China stabilising 0-5% Overweight

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

Europe (excl. Nordics) ECB monetary easing, weaker GDP growth 0-3% UnderweightNordics 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 10,700 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 (€/t) 157 159 154 158 161 159 159 159 157 160

Rapeseed (€/t) 359 370 380 390 400 400 400 400 375 400

CBOT Wheat (USd/bushel) 466 470 450 475 500 510 520 530 465 515

CBOT Corn (USd/bushel) 363 391 380 390 400 410 415 420 381 411CBOT Soybeans (USd/bushel) 881 1,059 1,175 1,175 1,175 1,150 1,125 1,100 1,072 1,138

Average

0.83

-0.30

-0.03

0.38

377

-0.55

-0.73

-

--

-0.20

-0.20

-0.20

0.76

0.750.99

-0.30

-0.30

-

-

Key int.rate

0.50

0.50

0.500.75

0.25

-0.75

0.00

0.00

-0.10-0.10

0.10

0.50

-0.50

0.10

-0.50-0.50

0.00

0.10

-

-0.50

10-yr swap yield

-0.51

0.05

0.050.05

3m interest rate

0.65

0.00

-0.10

0.25

-0.75

0.05

-0.30

0.19

0.190.20

0.25

0.25

0.75

-0.75-0.75

-0.50

-0.10

-0.20

0.951.35

0.35

0.350.45

-

-

1.00

-0.50

-

1.00

-0.02

0.000.00

-

--

-0.43

-0.50

1.00

-0.50

1.161.08

0.75

-0.50

112.7

-

-

--

115.2

744.0

743.8743.8

951.7

924.5

890.0

930.0

910.0

930.0910.0

930.0

109.6

744.3

90.0

90.0

109.0

110.0113.0

112.0

114.0118.0

114.2

118.6122.7

Currencyvs EUR

2-yr swap yield

Risk profile3 mth

Price trend3 mth

1.50

1.46

1.60

1.03

-0.22

-0.07

0.45

-0.66

-0.02

-0.22

-0.15-0.15

0.95

84.7

1.85

95.0

326

09-Sep

47

10,345

4,664

2,314

1,336

145

49

1,591

20172016

0.35

0.500.70

-

--

0.80

0.65

0.11

Medium -3 -+3%

989

377

0.31

0.600.70

1.41

1.45

1.55

0.801.00

-0.27

-

--

1.75

0.740.84

0.71

0.69

0.50

0.59

High

High

High -5 -+5%

Medium -3 -+3%

-3 -+3%

-5 -+5%

12 | 9 September 2016 www.danskeresearch.com

Weekly Fo

cus

Weekly Focus

Calendar

Source: Danske Bank Markets

Key Data and Events in Week 37

During the week Period Danske Bank Consensus Previous

Sat 10 - 15 CNY Money supply M2 y/y Aug 10.5% 10.2%

Sat 10 - 15 CNY New Yuan loans CNY bn Aug 725 463.6

Sat 10 - 15 CNY Aggregate financing CNY bn Aug 900.0 487.9

Sat 10 USD Fed's Kaplan (non-voter, dovish) speaks

Monday, September 12, 2016 Period Danske Bank Consensus Previous

1:50 JPY PPI m/m|y/y Aug -0.1%|-3.4% 0.0%|-3.9%

1:50 JPY Machine orders m/m|y/y Jul -2.9%|0.3% 8.3%|-0.9%

8:00 SEK PES unemployment % Aug 3.9%

9:00 DKK CPI m/m|y/y Aug -0.1%|0.4% 0.0%|0.5% -0.1%|0.3%

14:05 USD Fed's Lockhart (non-voter, neutral) speaks

19:00 USD Fed's Kashkari (non-voter, dovish) speaks

19:15 USD Fed's Brainard (voter, dovish) speaks

Tuesday, September 13, 2016 Period Danske Bank Consensus Previous

1:50 JPY BSI Large all industry q/q 3rd quarter -7.9%

3:30 AUD NAB Business Conditions Index Aug 8.0

4:00 CNY Fixed assets investments y/y Aug 7.9% 8.1%

4:00 CNY Industrial production y/y Aug 6.2% 6.0%

4:00 CNY Retail sales y/y Aug 10.2% 10.2%

8:00 DEM HICP, final m/m|y/y Aug …|0.3% -0.1%|0.3% -0.1%|0.3%

9:00 ESP HICP, final m/m|y/y Aug …|-0.3% 0.0%|-0.3% 0.0%|-0.3%

9:30 SEK CPI m/m|y/y Aug -0.2%|1.0% -0.1%|1.2% 0.1%|1.1%

9:30 SEK Underlying inflation CPIF m/m|y/y Aug 0.2%|1.3% 0.0%|1.5% 0.1%|1.4%

10:00 NOK Norges Bank Regional Network Report: Output next 6M Index Aug 0.5 0.28

10:00 ITL Industrial production m/m|y/y Jul 0.2%|-1.0% -0.4%|-1.0%

10:30 GBP PPI - input m/m|y/y Aug 0.5%|8.1% 3.3%|4.3%

10:30 GBP PPI - output m/m|y/y Aug 0.3%|1.0% 0.3%|0.3%

10:30 GBP CPI m/m|y/y Aug 0.4%|0.7% -0.1%|0.6%

10:30 GBP CPI core y/y Aug 1.4% 1.3%

11:00 DEM ZEW current situation Index Sep 58.5 56.0 57.6

11:00 DEM ZEW expectations Index Sep 2.5 2.5 0.5

11:00 EUR Employment q/q|y/y 2nd quarter 0.3%|… 0.3%|1.4%

12:00 USD NFIB small business optimism Index Aug 94.8 94.6

20:00 USD Budget statement USD bn Aug -98.0

Wednesday, September 14, 2016 Period Danske Bank Consensus Previous

2:30 AUD Westpac Consumer Confidence Index (% m/m) Sep 101|2.0%

6:30 JPY Industrial production, final m/m|y/y Jul 0.0%|-3.8%

8:00 SEK Prospera inflation expectations

8:45 FRF HICP, final m/m|y/y Aug …|0.4% 0.3%|0.4% 0.4%|0.4%

9:30 SEK GDP, final q/q|y/y 2nd quarter 0.3%|3.1% 0.3%|3.1%

10:00 ITL HICP, final m/m|y/y Aug …|0.0% …|0.0% ...|0.0%

10:30 GBP Average weekly earnings ex bonuses (3M) y/y Jul 2.1% 2.2% 2.3%

10:30 GBP Average weekly earnings (3M) y/y Jul 2.2% 2.4%

10:30 GBP Unemployment rate (3M) % Jul 4.9% 4.9% 4.9%

10:30 DKK Danish Central Bank publishes Q3 outlook 3rd quarter

11:00 EUR Industrial production m/m|y/y Jul -1.0%|… -0.9%|-0.7% 0.6%|0.4%

13:00 USD MBA Mortgage Applications % 0.9%

14:30 USD Import prices m/m|y/y Aug -0.1%|… 0.1%|-3.7%

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

13 | 9 September 2016 www.danskeresearch.com

Weekly Fo

cus

Weekly Focus

Calendar — continued

Source: Danske Bank Markets

Thursday, September 15, 2016 Period Danske Bank Consensus Previous

- EUR Ireland, GDP, first release q/q|y/y 2nd quarter -2.1%|2.3%

0:45 NZD GDP q/q|y/y 2nd quarter 1.1%|3.6% 0.7%|2.8%

3:30 AUD Employment change 1000 Aug 15 25.3

9:30 CHF SNB sight deposits -0.75% -0.75% -0.75%

9:30 SEK Unemployment (n.s.a.|s.a.) % Aug 6.1%|6.8% 6.3%|7.0%

10:00 NOK Trade balance NOK bn Aug 14

10:30 GBP Retail sales m/m|y/y Aug -0.4%|5.4% 1.4%|5.9%

10:30 GBP Retail sales ex fuels m/m|y/y Aug -0.8%|4.8% 1.5%|5.4%

11:00 EUR HICP inflation m/m|y/y Aug …|0.2% 0.1%|0.2% -0.6%|0.2%

11:00 EUR HICP - core inflation, final y/y Aug 0.8% 0.8% 0.8%

11:00 EUR Trade balance EUR bn Jul 22.0 23.4

13:00 GBP BoE rate announcement % 0.25% 0.25% 0.25%

13:00 GBP BoE minutes

13:00 GBP BoE government bond purchases (APF) GBP bn Sep 435 435 435

13:00 GBP BoE coporate bond purchases (CBPP) GBP bn Sep 10 10 10

14:30 USD PPI m/m|y/y Aug 0.1%|0.1% -0.4%|-0.2%

14:30 USD PPI core m/m|y/y Aug 0.1%|1.0% -0.3%|0.7%

14:30 USD Retail sales control group m/m Aug 0.25% 0.4% 0.0%

14:30 USD Retail sales m/m Aug -0.3% -0.1% 0.0%

14:30 USD Retail sales less autos m/m Aug 0.3% -0.3%

14:30 USD Retail sales less autos and gas m/m Aug 0.3% -0.1%

14:30 USD Empire Manufacturing PMI Index Sep -1.0 -4.2

14:30 USD Philly manufacturing index Index 1.0 2.0

14:30 USD Initial jobless claims 1000 259

14:30 USD Current account USD bn 2nd quarter -119.8 -124.7

15:15 USD Industrial production m/m Aug -0.2% 0.7%

15:15 USD Manufacturing production m/m Aug -0.3% 0.5%

15:15 USD Capacity utilization % Aug 75.7% 75.9%

Friday, September 16, 2016 Period Danske Bank Consensus Previous

- EUR EU summit in Bratislava

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

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

- EUR S&P may publish Portugal's debt rating

- EUR S&P may publish Finland's debt rating

- EUR S&P may publish Austria's debt rating

11:00 EUR Labour costs y/y 2nd quarter 1.7%

12:30 RUB Central Bank of Russia rate decision % 10.0% 10.0% 10.5%

14:30 USD CPI m/m|y/y Aug 0.1%|1.0% 0.1%|1.0% 0.0%|0.8%

14:30 USD CPI - core m/m|y/y Aug 0.2%|2.3% 0.2%|2.3% 0.1%|2.2%

16:00 USD University of Michigan Confidence, preliminary Index Sep 93.0 91.0 89.8

22:00 USD TICS international capital flow, Net inflow USD bn Jul -202.8

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

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

14 | 9 September 2016 www.danskeresearch.com

Weekly Fo

cus

Weekly Focus

Disclosure 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 Kristoffer Kjær Lomholt, Analyst.

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Weekly Fo

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Weekly Focus

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