Economic Research

Week in Focus
How asset allocation influences markets
The more investors diversify on a regional basis, the less they actually diversify their investment risk due to rising correlations between regional equity indices. The move towards multi-asset investment in recent years is beginning to show a similar trend. We examine the implications for investors. Page 2 Risk assets ever more highly correlated
Average correlation between monthly equity returns in industrialised markets and emerging markets, high yield bonds, commodities and REITs in the previous 12 months

29 July 2011

1.0

0.6

0.2

-0.2 1990

1993

1996

1999

2002

2005

2008

2011

Source: Bloomberg, Commerzbank Research

US debt crisis is escalating: US politicians are still not united in their desire to raise the debt ceiling. We provide an update of latest developments. Page 5 Greek bailout package plenty of numbers, plenty of uncertainty: One week after the new rescue package for Greece was drawn up, there is much uncertainty as to what it actually entails. We provide answers to some key questions. Page 6 ECB Council Meeting in no hurry to hike rates: The ECB is unlikely to give much insight on the timing of the next rate rise at Thursday's meeting. Page 7 FX Compass: What are companies expectations for exchange rates? Over the last six months we have surveyed companies regarding their views on key currency pairs. Latest results suggest that the euro bears have the upper hand. Page 8 Product Idea Forward plus on nickel: This product allows investors to hedge against an expected rise in the nickel price. Page 9

Outlook for week of 1 to 5 August

Economic data: The ISM and employment reports may offer some signs of hope for the US economy in Q3. However, German industrial data for July are likely to disappoint. Page 10 Bond market: Once further details of the Greek rescue package become clear and the US debt ceiling is raised, risk appetite is likely to pick up again, depressing risk premiums for Italy and Spain whilst Bund yields should rise. Page 14 FX market: Since open questions following the EU summit are likely to occupy markets in the coming days more than the US debt ceiling debate, EUR-USD is likely to trend slightly downwards in the days ahead. Page 15 Equity market: Our base scenario envisages a clear decline in political event risk which should produce a re-rating of equities over the coming months. Page 16
Chief Economist Dr Jrg Krmer
+49 69 136 23650 joerg.kraemer@commerzbank.com

Managing Editor Peter Dixon

+44 20 7475 4806 peter.dixon@commerzbank.com

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For important disclosure information please see end of this document

Some consequences of cross asset allocation

Dr Bernd Meyer, CFA Tel. +49 69 136 87788

It is becoming increasingly apparent that successful investment strategies require investors to consider how changes in their behaviour and the general approach to asset allocation feed back to affect markets. Increased global equity investments have, in the last 20 years, led to rising correlations between regional equity indices, reducing the benefits of regional equity diversification. In a recent Cross Asset Feature1 we argued that the move towards multi-asset investment in recent years is beginning to show a similar trend. Correlations between various risk assets have risen, while at the same time the correlations of risk assets with government bonds have become more negative. Investors looking for effective diversification among risk assets will either have to constantly look for new asset classes, or might need to radically change their asset allocation approach.

Rising regional equity correlations led to a cross asset approach

As a consequence of the declining effectiveness of global equity diversification, investors were forced to look across asset classes for effective diversification. They started to expand their investment universe, adding, for example, commodities as an additional asset class. The trend towards multi-asset investing is currently in full swing. Major asset managers have established multi-asset business units outside of equities and fixed income, and some investment banks have established multi or cross asset strategy teams. However, with an increasing amount of money pouring into alternative and, in most cases, less liquid asset classes, this investor behaviour itself affects the return and correlation characteristics of these securities. In our view, this so far has become most visible for commodities, as illustrated by the following three major consequences. 1. Commodity future curves that tended to be in backwardation are now more likely to be in contango With physical investment in most commodities not feasible for the majority of investors, the volumes in commodity futures and options markets have soared. It is true that commodity exposure today is easily available through exchange traded products, yet the issuing bank will still have to hedge the exposure in futures or options markets. Before financial investors became involved in commodity markets, commodity futures were driven by hedging needs. But financial investors, partly due to the inclusion of commodities in strategic asset allocations, have a bias towards long exposure, disturbing the market balance. As a consequence, many commodity future curves, which used to be in backwardation (future prices trading below the spot price), are now in contango (future prices above the current spot price).

CHART 1: What used to be roll gains in commodity investments have become roll losses in recent years
Rolling difference of GSCI 12m total return and 12 spot

CHART 2: The price of crude oil is less dependent on inventory levels

horizontal axis: OECD industrial inventories, in days of consumption, vertical axis: Oil price, Brent, in USD per barrel

0.6 0.4 0.2 0.0 -0.2

Roll gains

150 125 100 75 50

Roll losses

25 0 45 50 1991-2004 55 2005-2008 60 65 2009-2010

-0.4 1971 1976 1981 1986 1991 1996 2001 2006 2011

Source: Bloomberg, Commerzbank Research

Source: Bloomberg, Commerzbank Research

Cross Asset Feature: Some consequences of the trend towards cross asset allocation, 28 July 2011.

29 July 2011

When future curves were in backwardation, long exposure to commodity futures generated roll gains on top of the commodity spot price, but this has turned into roll losses now that future curves are in contango. Chart 1 illustrates the difference between the 12-month rolling total return on the GSCI commodity index and the 12-month rolling spot price of the underlying commodities. A positive difference reflects roll gains and a negative difference roll losses. The change in the pattern due to the increased involvement of financial investors in the commodity futures markets is very obvious. While for almost 30 years annual roll gains averaging 10% could be pocketed, the last five years have brought annual roll losses of between 10% and 20%. The trend in commodity futures markets from roll gains to roll losses for long positions is changing the total return characteristics of commodity investments and investors that have moved into the commodity space might, in the long run, be unable to generate the return they had hoped for. 2. Shorter-term commodity price moves increasingly driven by financial investors Increased financial investor involvement in the commodity space also means that commodity prices are increasingly determined by investor expectations rather than fundamentals. Obviously, fundamentals cannot be neglected and commodity prices will ultimately converge towards fundamental values, yet shorter-term moves are more affected by investor sentiment. As an indication of this development, our commodity analysts highlight the reduced correlation of the oil price with oil inventory levels (chart 2).2 Before 2005, there was indeed a close relationship between inventory levels and the oil price: The higher the industrial inventories in relation to current consumption, the lower the price. This relationship seems to have broken down. Instead, the relationship between the oil price and the positioning of financial investors in the oil futures market becomes increasingly apparent. By examining the proportion of open interest positions in commodity futures that are due to noncommercial traders, we can get an impression of how the importance of speculative future positions has developed over time. As chart 3 shows, the fraction of open interest resulting from speculative positions has increased strongly for gold and oil, both of which are commodities in which financial investors have a particular interest. For other commodities, e.g. soybeans, the influence of non-commercial traders has increased more slowly. CHART 3: The influence of non-commercial traders has increased, particularly for crude oil and gold
Fraction of open interest resulting from non-commercial traders

CHART 4: Increasingly negative correlation between risk assets and US Treasury returns
12M correlation of monthly USD returns

0.6 0.5 0.4 0.3 0.2 0.1 0.0 1993 1999 Gold
Source: CFTC, Commerzbank Research

0.8 0.4 0.0 -0.4 -0.8 1990

2005 Crude oil

2011 Soybeans

1994

1998

2002

2006

2010

Source: Bloomberg, Commerzbank Research

3. Financial investor involvement has fuelled rising correlations of commodities with other risk assets With financial investors behaviour dominating short-term price movements in commodities, changes in investors risk appetite and the resulting allocation into and out of risk assets, similarly affects commodities and equities. As a result, the correlation of these risk assets has risen, compared to the lower levels recorded when commodity prices were not dominated by investor behaviour. The benefits of diversification, which investors were seeking by moving into the new asset class, have deteriorated, with an increasing number of investors moving in the same direction. We see the upward pressure on correlations resulting from investor behaviour not as temporary, but as permanent. This could lead to increased upward pressures on risk asset correlations in the future, even in the event that some of the other drivers of higher
2

See: The Week in Focus The oil price drives everything, but what drives the oil price? 15 April 2011.

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correlations subside. While it is possible that investors will be discouraged from including commodities in their portfolios by the reduction in the diversification effect, we believe that the lack of alternative liquid risk assets makes this prospect unlikely.

Rising correlations between risk assets have occurred in parallel to a decline in the correlation of risk assets with sovereign debt
While commodity markets provide compelling evidence of the trend towards more closely correlated risk asset markets, we can also observe similar trends for other asset classes. For example, the one-year rolling correlation of monthly returns for US high yield debt and developed market equities has trended higher over the last twenty years. A similar development is evident for the correlation of high yield debt and emerging market equity returns. As a consequence, we observe on the one hand a block of risk assets that are increasingly strongly correlated and on the other hand a block of safe-haven assets, that also are strongly correlated with each other. The front page chart illustrates that the average rolling correlation of twelve monthly returns3 of risk assets including developed market equity, emerging market equity, high yield debt, commodities and REITs has clearly risen over the last 20 years. While increasing regional equity correlations have contributed to the rise in risk asset correlations, they cannot explain the overall trend toward higher correlations. Safe-haven assets have also become more strongly correlated, with the average monthly return correlation of US Treasuries, Bunds, Gilts and Japanese government bonds trending higher over the same 20 year period. With investors, depending on their risk perception, moving their investments back and forth between risk assets and safe havens in a widely-observable risk-on/risk-off approach to investment, the negative correlation between both blocks has also increased (chart 4).

What does all of this mean for investors?

First of all, it shows that effective diversification can only be achieved by combining risk assets and safe-haven assets.4 Effective diversification solely in the risk space looks impossible. Investors looking for the best possible diversification among risk assets will constantly have to look for new assets and asset classes that could be added to their investment universe. Volatility products, frontier market equity or emerging market credit, for example, have recently attracted investor interest in this regard. The problem though is that any further assets or asset classes are likely to be even less liquid. This could mean that the perceived diversification benefits could deteriorate even more quickly than has been the case for commodities. Nonetheless, multi-asset investment still makes a lot of sense in our view. Despite increased correlations of risk assets, they remain less than perfectly correlated and therefore some diversification effect remains. However, investors need to be aware that when adding new assets or asset classes to their investment universe they should treat historical correlation analyses with caution. The realised diversification effect in the longer term may be smaller than suggested by past developments. What could be the way out? Various approaches have been discussed that come closer to a revolution of the investment process and asset allocation than an evolution. For example, one approach involves allocation on the basis of investment themes rather than asset classes. The idea is to identify themes such as inflation, infrastructure, demography, alternative energies or ESG,5 allocate funds to these themes, and only then look how to gain attractive exposure to these themes through various asset classes. Such an approach would be supported by the recent less benchmark-oriented and absolute return-focused thinking of many investors. The challenge of this approach is obviously that the different assets for one investment theme exhibit very different risk-return characteristics and cannot directly be compared. Therefore, a likely start of such a process would be initially to have separate buckets for the themes in each asset class. However, this brings us back to square one: how to make the allocation across the asset classes.

In US dollars, though a similar pattern is evident when local currency returns are considered. We have already shown that due to the decline in correlations between risk assets and sovereign debt, the average correlation of assets in a traditional portfolio merely corrected during the financial crisis, after being unusually low during prior years. See: Cross Asset Feature, 3 November 2010. 5 ESG: Environmental, Social, Governance.
4

29 July 2011

USA: debt crisis escalates

Bernd Weidensteiner Tel. +49 69 136 24527

The chances of agreement being reached on a rise in the US debt ceiling by 2 August are diminishing. The American government could thus experience financial difficulties in the weeks ahead, and the AAA rating of US sovereign debt looks shaky. What should market players expect?

Political situation muddled

The House of Representatives did not vote on John A. Boehner's (speaker of the Republican majority) consolidation plan yesterday since he failed to muster a majority in his own party. This plan could have served as a basis for a compromise with the Democrats. For, if certain unrealistic elements are removed from the rival proposal from Democratic Senator Reid (e.g. "cuts" in military deployments which are in any case approaching their end), the planned cuts in expenditure he is projecting for the period 2012-21 are broadly in line with those of Boehner (chart 5). However, after the vote has again been postponed, a compromise will not easily be reached.

Treasury Secretary planning for Day X

Due to unforeseen additional tax revenues, the Federal government should have sufficient funds to cover all its obligations not only until the 2 August deadline but until at least 10 August. Thereafter a rationing of payments is unavoidable. Preparations are already being made. The Fed, which handles the government's payments traffic, is also involved in the planning for Day X. Whether a "prioritisation" of payments is legally possible, is a matter of controversy. The financial market is assuming that debt will be serviced and social security payments made in any case. However, if payments have to be made after their due date, this is not guaranteed. On 15 August interest payments of USD 29bn will become due. Should there be delays here, problems could arise for the refinancing of maturing bonds (which may be replaced by new ones without any overall increase in debt). In August, bonds of USD 460bn fall due, the majority being money market securities (chart 6).

US sovereign bonds: a safe haven despite everything?

If a compromise is not found in the next few days, there is a risk of the American rating being downgraded. So far the dispute about the debt ceiling has not had an impact on US sovereign bonds. Their yields have even fallen again recently. This paradoxical outcome can be explained by the fact that investors are withdrawing from presumably higher-risk types of investment because of the heightened political uncertainties and are opting for the safe haven of Treasuries. If a rating downgrade actually looks likely, this could alter. There is certainly no risk of a full-scale flight from Treasuries given the lack of alternatives. However, German Bunds could benefit from an ongoing crisis in the USA. CHART 5: Consolidation plans CHART 6: Maturities of US government securities
Discretionary expenditure of the US federal government. CBO projection based on current legal situation. Proposals of Boehner (Rep.) and Reid (Dem.). Black areas: estimates for combat missions in Iraq and Afghanistan. Totals for period 2012-2021, in $ bn Maturities of T-Bills and T-Notes (grey) in August, in USD bn

15000 14000 13000 12000 11000 10000 CBO Boehner ex Iraq/Afg

Source: CBO, Commerzbank Research

120 100 80 60 40 20
Reid Iraq/Afg

0 4.8. 11.8. 18.8. 25.8. 31.8.

Source: Bloomberg, Commerzbank Research

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Greek bailout: plenty of numbers, plenty of uncertainty

Dr Ralph Solveen Tel. +49 69 136 22322

Although a week has now passed since the new rescue package for Greece was drawn up, many people are still unsure of what it actually entails. The numbers quoted in many publications vary wildly, and the same names are used to describe different things. We provide answers to some of the key questions.6

1. What will the 109 billion in the package be used for?

This total amount is broken down into four parts: 20 billion will be used to recapitalise the Greek banks and another 20 billion will go towards buying back Greek bonds. AAA-rated zero coupon bonds will be bought for 35 billion in order to guarantee repayment of the bonds that private investors receive in exchange for their current paper. Only the remaining 34 billion is earmarked for directly financing the Greek deficit and repaying maturing bonds.

2. How will the Greek state be funded up to 2014?

According to the latest medium-term planning (including the new consolidation package), the Greek national deficit will be around 41 billion between mid-2011 and the end of 2014. In additions, bonds amounting to some 108 billion will mature. More than half of this 150 billion total will be covered by the tranche of the first bailout that has not yet been paid out (45 billion) and the payments from the new package (34 billion). Another 28 billion is to be generated through privatisation. If as announced by the IIF bonds amounting to 54 billion maturing by 2014 really are exchanged, a safety cushion of 11 billion would be created (45+34+28+54=161=150+11), which could be further enlarged if needed by also buying up short-dated bonds (see point 3). This buffer may be necessary: Our debt monitor shows that Greece is behind on consolidating its budget. In addition many observers believe that the proceeds expected from privatisation are ambitious. It also remains to be seen how many bonds will actually be swapped.

3. By how much will the Greek debt be reduced?

For half of the four options available for the debt swap offered to private investors, the par value of the bonds will decline by 20 per cent. If as assumed by the IIF bonds amounting to 135 billion are swapped and the four options are taken up to an equal extent, the nominal debt would decline by 13.5 billion (50%x20%x135). Moreover, bonds would be bought back. Evidently an average purchase price of around 61 per cent is anticipated, which would mean that the available 20 billion could be used to buy bonds with a par value of 32.6 billion (20/0.61). This would reduce Greece's nominal debt by 12.6 billion (32.6 billion fewer bonds 20 billion of new EFSF debt).7 The debt would therefore contract in total by 26 billion or 11.5 per cent of gross domestic product.

4. What additional powers will EFSF and its successor ESM acquire?
It is intended that the EFSF (and therefore the ESM) will be able to take preventive measures in future (in other words, countries can receive funds before they end up in crisis as was the case with Greece, Ireland and Portugal) and it can also recapitalise financial institutions in countries that do not otherwise have a rescue package. In addition, it can now buy bonds on the secondary market, taking on what has been the role of the ECB with its purchase programme (which the ECB stopped using a long time ago). However, this requires the ECB to recognize the existence of exceptional financial market circumstances and risks to financial stability. Moreover, according to Germany's Chancellor Merkel, all the euro zone countries must give their consent.

For further details see The Big Picture: As the dust settles , Ahead of the Curve, 28 July 2011. However, if more short-dated bonds have to be bought to meet Greece's short-term funding needs (see point 2), higher prices would have to be paid, i.e. the debt would not be reduced by so much.
7

29 July 2011

ECB Council meeting: In no hurry to hike rates

Dr Christoph Balz Tel. +49 69 136 24889

At its meeting next Thursday, the ECB is likely to still refer to the level of interest rates as being accommodative and to point to upside risks to price stability. At the same time, the central bank will probably stress heightened uncertainty and refrain from hinting at the timing of the next rate hike. Most comments from ECB Council members in recent weeks were centred around the EMU sovereign debt crisis. This topic is also likely to dominate the press conference following the Council meeting next Thursday. Journalists will likely examine above all the ECB officials differing views on the decisions of the most recent EU summit. While ECB President Trichet emphasised that the heads of state had followed the central banks recommendations, Bundesbank President Weidmann offered a critical voice, suggesting that the "communitisation" of risks undermined the foundation of EMU which is based on fiscal autonomy. In his introductory remarks, Trichet might increasingly refer to fiscal policy and thereby force the EMU member states to implement structural reforms and bring their government budgets in order. By contrast, the central banks bread-and-butter business, namely setting rates in a way that prices remain stable, is likely to take a backseat. This is also due to the fact that the ECB hiked rates in early July and usually explains this step in greater detail at the press conference in the following month, allowing subsequent data releases to confirm the Council's action. Based on experience, it usually gives a relatively brief outlook at these meetings. Moreover, the central bank is likely to point to increased uncertainty on Thursday. Overall, we expect the ECB to stick to its assessment of interest rates being low and monetary policy accommodative'. The central bank is thus leaving the door open for further rate hikes further without pre-committing itself. Moreover, it is likely to mention that economic data in the euro area is pointing to slower growth. Our surprise indicator, which summarises actual data deviations from the forecasts for a variety of individual indicators, has been falling for some time (chart 7). Yet the decline seen so far should not be sufficient to prompt the ECB to see predominantly downside risks to growth. In view of the low level of interest rates, there are good reasons to suppose that the ECB will raise its key rate by another 25 basis points this year, taking it to 1.75%. With most recent economic data proving disappointing and the sovereign debt crisis ongoing, there is an increasing likelihood that following the rate hikes in April and July the central bank might take a break longer than three months before it pulls the trigger again. CHART 7: Euro area economic data came in disappointing of late
Commerzbank surprise indicator
250 200 150 100 50 0 -50 Jan-10

Jul-10

Jan-11

Jul-11

Source: Bloomberg, Commerzbank Research

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FX Compass: What are companies expectations for exchange rates?

Alexandra Bechtel Tel. +49 69 136 41250

What is the view of German importers and exporters about further developments on the FX markets? Commerzbanks new monthly company poll investigates this issue.

FX-Compass: What is the corporate view on developments in the FX markets?

Commerzbanks FX Compass is the result of an anonymised monthly poll, which has been conducted since February 2011. Questions are aimed at the view on the five most important currency pairs based on German foreign trade (EUR-USD, EUR-GBP, EUR-CHF, EUR-PLN, EUR-RUB). The aim of the indicator is to predict medium term trends on the FX markets based on the results. In particular, in case of strong exchange rate moves, the results can provide an indication as to whether a currency is merely being punished short term or whether we are seeing the first signs of a general trend reversal.

Euro outlook revised notably downwards

The outlook regarding the further development of EUR-USD amongst German companies has changed completely over the past 6 months (chart 8). Whilst in February the majority of participants expected a euro appreciation over all forecasting horizons, expectations over a 6-12 month horizon started to deteriorate as early as March. From then on, the euro bears gained the upper hand. In the current July survey companies for the first time expected a weaker euro even on a short-term horizon. The latest developments in particular are likely to be due to the further escalation of the debt crisis. After all, the crisis acquired a new dimension due to the serious doubts about the sustainability of Italian public finances which re-emerged at the time of the July poll. What might also play a role is the fact that the trend in EUR-USD contrary to when previous surveys were carried out is now pointing downwards (chart 9). Are you interested in participating in our FX survey? Please contact Alexandra.Bechtel@commerzbank.com

CHART 8: Euro bears now in the majority

FX-Compass poll results for EUR-USD, net total euro bulls (EURUSD appreciates) minus euro bears (EUR-USD depreciates)

CHART 9: Trend in EUR-USD has reverted

EUR-USD, daily data and average prices since survey was first carried out

1.50 20 10 0 -10 -20 -30 -40 -50 3 months Feb11 Mar11 6 months Apr11 May 11 12 months Jun 11 Jul 11 1.35 1.30 1.3576 1.45 1.40 1.4388 1.4107 1.4192

1.4461 1,416

1.25 Jan 11 Feb 11 Mar 11 Apr 11 May 11 Jun 11 Jul 11 Daily values Average at time of poll

Source: Commerzbank Research

Source: Bloomberg, Commerzbank Research

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29 July 2011

Product idea: Forward plus on nickel

Take advantage of attractive price level

Daniel Briesemann Tel. +49 69 136 29158

The supply situation in the global nickel market has tightened in recent months. The situation is unlikely to ease until next year. We expect nickel prices to continue rising until the end of the year and therefore recommend locking in current prices. Since mid-June the nickel price has reverted to an upward trend. This is mainly because current production cannot fully meet rising demand. According to the International Nickel Study Group, in the first five months of this year there was a supply deficit in the global nickel market of 9,300 tonnes. As a result, LME stockpiles have fallen by 25% or approx. 33,000 tonnes to just over 102,000 tonnes. Since the headwind from the financial markets started to ease, this has allowed the price to rise. The price has also been boosted by news that the commissioning of two major projects has had to be postponed because of technical problems: Both the Goro mine in New Caledonia and the Ambatovy mine in Madagascar will not now commence operations until Q1 2012. On the other hand, this means that all the more capacity will come on stream next year, thereby significantly expanding the supply. Another factor is the high production of nickel pig iron in China in recent months. This has sharply increased the countrys imports of nickel ore and nickel concentrate, thereby also contributing to the recent price rise. Next year, though, the growing stockpiles of this substitute should depress demand for refined nickel. At the same time, demand is unlikely to increase as strongly. Already this year the stainless steel industry the largest consumer of nickel accounting for around 70% of the market will be unable to repeat the high rate of growth seen last year. The medium to long-term prospects are therefore deteriorating. All in all, we expect rising prices in the short term. By the end of the year nickel should rise to USD 26,500 per tonne, equivalent to around EUR 18,275 per tonne at current exchange rates. Next year we see little upside potential, though the nickel price should not fall significantly either. We therefore recommend a forward plus on nickel in order to lock in current prices and at the same time profit up to a certain limit from falling prices. Price protection with participation in falling prices: Forward plus on nickel in EUR Maturity: 01.08.2011 31.07.2012 Reference quantity: 5 mT per month, total 60 mT Maximum price: EUR 17,550 per mT Participation limit: EUR 15,100 per mT Premium EUR 0 (zero cost) Price reference: Nickel LME cash and /$ at 13.15 hrs London time The price is calculated as the average of all trading days of the respective period, monthly payment (based on the agreed amount of nickel). If the variable price of a period is fixed above the maximum price, the client will receive a compensatory payment equal to the difference between the variable price and the maximum price. If the variable price of a period is below the maximum price and above the participation limit, no payment will be made and the client will fully participate of lower nickel prices. If the variable price is fixed at or below the participation limit, the client will pay the difference between the maximum price and the variable price. Comparable fixed price: EUR 16,920 per mT

29 July 2011

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Preview The week of August 1st to August 5th

Time Region Indicator Period Forecast Survey Last

Monday, 1 August 2011 2:00 9:00 9:30 15:00 CHN EUR GBR USA PMI PMI manufacturing, final PMI manufacturing ISM manufacturing index Jul Jul Jul Jul sa sa sa 49.8 50.4 51.0 55.5 50.1 50.4 51.0 55.0 50.9 50.4 (p) 51.3 55.3

Tuesday, 2 August 2011 5:30 13:30 AUS USA Key interest rate decision of the RBA Personal income Personal spending PCE core rate Total auto sales Aug Jun Jun Jun Jul % mom, sa mom, sa mom, sa yoy SAAR, m 4.75 0.3 0.0 0.0 1.4 11.8 4.75 0.2 0.2 0.2 1.4 11.8 4.75 0.3 0.0 0.3 1.2 11.41

22:00

Wednesday, 3 August 2011 9:00 9:30 13:15 15:00 EUR GBR USA PMI services, final PMI services ADP employment change ISM non-manufacturing index Industrial orders Jul Jul Jul Jul Jun sa sa mom, sa, k sa mom, sa 51.4 53.5 100 53.5 -0.5 51.4 53.2 110 54.0 0.4 51.4 (p) 53.9 157 53.3 0.8

Thursday, 4 August 2011 11:00 GER GBR EUR USA Industrial orders Key interest rate decision of the BoE ECB interest rate decision Initial claims Jun Aug Aug 29 Jul mom, sa yoy, wda % % k -3.5 4.0 0.50 1.50 390 -0.1 4.6 0.50 1.50 1.8 12.2 0.50 1.50 398

12:00 12:45 13:30

Friday, 5 August 2011 # 11:00 JPN GER USA Key interest rate decision of the BoJ Industrial production Non-farm payrolls Unemployment rate Average hourly earnings Aug Jun Jul Jul Jul % mom, sa yoy, wda mom, sa, k %, sa mom, sa 0.1 -1.0 7.0 80 9.2 0.1 0.1 0,1 100 9.2 0.2 0.1 1.2 7.6 18 9.2 0.0

13:30

Source: Bloomberg, Commerzbank Economic Research *Time GMT (subtract 5 hours for EDST, add 1 hour for CET), # = Possible release; mom/qoq/yoy: change to previous period in percent, AR = annual rate, sa = seasonal adjusted, wda = working days adjusted;

= data of highest importance for markets.

10

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Economic data preview:

USA: How was the start into the third quarter?

Dr Christoph Balz Tel. +49 69 136 24889

In the USA, the first major data for July is due out next week. While the ISM index is likely to hold up at a decent level, the labour market report should come in better than in June but still offer much room for improvement. The German industrial sector will probably see another set of poor data. After the US economys disappointing performance in the first half, virtually all economists are looking for a recovery in the third quarter. According to a Bloomberg survey, 56 out of 60 respondents including ourselves expect stronger quarter-on-quarter growth in the current quarter: The oil price has stabilised and Japanese car manufacturers suffering from supply failures following the Japanese disaster are planning to increase production again. The first major July data due out next week will probably not be at odds with a recovery, but is unlikely to lend strong support to this thesis either. As regards the manufacturing ISM, we are looking for a level of 55.5 and thus fairly flat performance compared to June (55.3; consensus 55.0). On the one hand, the slight improvement in the regional purchasing manager indices such as the Empire State index or the Philly Fed index argues for a minor increase. On the other hand, the ISM index has already reached a fairly high level based on these indicators. Other measures do not paint a clear picture either. Given the recent stagnation in industrial production the index level appears too high so that it is unclear whether the turnaround in the automobile sector is now driving the index even higher. By contrast, a strong rebound on the equity market is pointing to upside potential (chart 10). The US labour market report should come in somewhat better than in June but fail to be entirely convincing. We are looking for a gain in payrolls of 80k in July (consensus: 100k) after job creation almost stalled in May (25k) and June (18k). Yet we believe employment is unlikely to stagnate for much longer as businesses continue to drive up investment significantly. However, such sluggish job creation is not enough to reduce unemployment given the steady increase in labour supply. With the labour market tending to trail the economy (chart 11), the current dip is more likely to reflect the weakness in the first half and does not necessarily contradict a recovery.

Germany: Further bad news from the industrial sector

German industry is likely to report further bad news next week. While the significant 3.5% (consensus: -0.1%) month-on-month decline in order intake will likely be due to a normalisation following the impact of a major order for Deutsche Bahn on the May reading, we are looking for a decline of -1% even excluding this effect. Production is also likely to have contracted as the rather poor orders performance in the past few months should gradually take its toll. Moreover, the increase in May also benefited from the unusual lack of school holidays in that month. As a result, production is likely to have fallen by 1% (consensus: 0.1%). CHART 10: USA equities on the rise CHART 11: USA labour market trailing the economy
ISM index; S&P 500 equity index, monthly averages, percentage year-on-year change, Commerzbank forecast for July Real GDP, private sector employment; quarter-on-quarter change, annual rate in percent

75 70 65 60 55 50 45 40 35 30 2002

60 40 20 0 -20 -40 -60 2004 2006 2008 2010 ISM (LHS) S&P 500 (RHS)

8 4 0 -4 -8 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 GDP employment

Source: Global insight, Commerzbank Research

Source: Global Insight, Commerzbank Research

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11

Central Bank Watch (1)

Fed
Currently weak US growth is also reflected in the Feds latest Beige Book, which collects reports from the different Fed districts. Eight out of twelve regional Federal Reserve Banks report lower growth in their areas. This had been the case for only four regions in the previous edition of the Beige Book, which was released on 8 June. The continued weakness in residential construction is no major surprise. With regard to private consumption, the Fed sees some relief for consumers from the decline in gasoline prices, which supported consumption. The labour market is still struggling, and the number of hirings rose only moderately. Price pressures appear to be declining, even though some companies succeeded in passing on higher costs to customers. Overall, the Fed is drawing the picture of weak growth, but not a slump in economic activity. It will likely feel confirmed in pursuing a wait-and-see course. Bernd Weidensteiner +49 69 136 24527 CHART 12: Expected Federal Funds Rate (USD)
1,0 0,8 0,6 0,4 0,2 0,0 current Sep 11 Overnight Index Swaps 28.07.11 Dez 11 Mrz 12 Jun 12 Sep 12

21.07.11

Commerzbank

TABLE 1: Consensus forecast Fed funds rate

Q3 11 Consensus High Low Commerzbank 0.25 0.50 0.25 0.25 Q4 11 0.25 1.00 0.25 0.25 Q2 12 0.38 3.00 0.25 0.25

Source: Bloomberg, Commerzbank Research

ECB
French central bank president Christian Noyer caused some confusion about the ECBs rate policy at the beginning of the week. The ECB council member was quoted by a newspaper as saying that the Council was in a position of strong vigilance, but that this did not predetermine what it would do. ECB President Trichet usually uses the term strong vigilance in order to announce imminent rate hikes. Seeing that the ECB only hiked its key rate at the beginning of July, a second step after such a short delay would have been a major surprise. A Banque de France spokesperson later clarified that Noyer had meant to say strong alertness. While this wording also implies vigilance, the ECB attaches a much vaguer meaning to it. The comments are therefore in line with our position that the ECB will raise its key rate by another 25 basis points, to 1.75%, this year, but not before Q4. Council member Bini Smaghi said in the meantime that the euro area economy was not recovering very strongly, but at an above-potential rate of growth. The ECB would have to hike its key rates so that they were better in line with the economic situation. Dr Christoph Balz +49 69 136 24889 CHART 13: Expected ECB minimum bid rate (EUR)
3,0 2,5 2,0 1,5 1,0 current Sep 11 Overnight Index Swaps 28.07.11 Dez 11 Mrz 12 Jun 12 Sep 12

21.07.11

Commerzbank

TABLE 2: Consensus Forecasts ECB minimum bid rate

Q3 11 Consensus High Low Commerzbank 1.50 1.75 1.50 1.50 Q4 11 1.75 2.00 1.50 1.75 Q2 12 2.00 2.50 1.50 2.25

Source: Reuters, Commerzbank Research

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Central Bank Watch (2)

BoE
Second quarter GDP growth was disappointing, at +0.2% qo-q, and the BoE cannot afford to ignore the current debate on low growth since its mandate is to secure price stability subject to "the Governments economic objectives including those for growth and employment." Household spending remains sluggish partly because high inflation is eroding purchasing power and the BoE's view is that increasing rates to counter a temporary spike in inflation will further hamper spending. Not only will the BoE not raise rates next week, but a hike before the end of 2011 looks increasingly unlikely. The MPC will have access to the BoE's new economic forecast, due for public release on 10 August, which will almost certainly include a downward revision to the 2011 GDP growth projection of 1.8%. This is yet another reason to suppose that the MPC will be content to wait a while longer before deciding to raise rates. Peter Dixon +44 20 7475 1808 CHART 14: Expected interest rate for 3-month funds (GBP)
2,5 2,0 1,5 1,0 0,5 current Sep 11 Dez 11 Mrz 12 Jun 12 Sep 12 Futures 28.07.11 21.07.11 Commerzbank

Source: Bloomberg, Commerzbank Research

BoJ
The Bank of Japan is increasingly concerned about the current appreciation of the yen. Once again the currency is benefiting from its role as a safe haven. It has now risen even more strongly than after the earthquake when the G7 central banks intervened. The verbal interventions by the central bank and finance minister are still moderate, as the yen has risen only gradually so far. Both wish to await the outcome of the debate over the increase in the US debt ceiling. As a first counter-measure, the BoJ might begin by increasing liquidity supply. If the currency goes on rising and this has a strongly inhibiting effect on exports, the BoJ and the finance ministry will have to take a stand. Wolfgang Leim +49 69 136 24525 CHART 15: Expected interest rate for 3-month funds (JPY)
1,0 0,8 0,6 0,4 0,2 0,0 current Sep 11 Dez 11 Mrz 12 Futures 28.07.11 21.07.11 Jun 12 Sep 12

Commerzbank

Source: Bloomberg, Commerzbank Research

RBA (Australia)
The inflation rate in Australia increased more sharply than expected to 3.6% in the second quarter. The core inflation rate reached 2.7% and is close to the upper end of the central bank's target range. The RBA is therefore very likely to raise its key interest rate currently 4.75% again before year-end. It is true that special factors relating to the flooding have also contributed to the higher inflation rate. However, increasing labour shortages have also generally increased the pressure on wages and thus inflation. At its meeting next week the RBA is nevertheless likely to continue to hold back on account of the current global economic risks. It will certainly also want to avoid triggering a further appreciation of the Australian dollar which has climbed to a record peak above USD 1.10. Wolfgang Leim +49 69 136 24525 CHART 16: Expected interest rate for 3-month funds (AUD)
6,5 6,0 5,5 5,0 4,5 4,0 current Sep 11 Dez 11 Mrz 12 Jun 12 Sep 12 Futures

28.07.11

21.07.11

Commerzbank

Source: Bloomberg, Commerzbank Research

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Bond market preview:

Tensions are building up again

Rainer Guntermann Tel. +49 69 136 87506

The still partially unclear details of the rescue package for Greece and the grid-locked debate over the US debt ceiling are keeping the bond markets in suspense. For the time being, Bunds are benefiting from their safe haven status. But as soon as further details of the rescue package are confirmed and the US debt ceiling is raised, risk appetite is likely to pick up again, risk premiums for Italy and Spain will fall and Bund yields will climb. TABLE 3: Weekly outlook for yields and curve Bunds Yield (10 years) Curve (10 2 years)
Source: Commerzbank Research

US Treasuries volatile sideways neutral

volatile sideways neutral

Momentum outlook for Bund future 1 5 August Economy Inflation Monetary policy Trend Supply Risk aversion

Over the next few days the bond markets will hold their breath about the outcome of the mired US debt ceiling debate. It still seems very unlikely that US politicians will actually risk national bankruptcy after all, the effects would be extremely difficult to control. Nevertheless, for every additional day on which no solution is found, the market may price a higher risk that an accident could happen. Moreover, a downgrade of the USAs credit rating is entirely possible, as the rating agencies have made it clear that they expect a credible and substantive plan for mediumterm budget consolidation. All this is likely to have a decisive impact on the market trend of US Treasuries in the coming week. Until agreement is reached, US Treasury yields will tend to rise, though general risk aversion may put a brake on the upward trend. Major disappointments in the economic data could even depress yields, despite the unresolved debt debate. Against this background, the US purchasing manager indices and labour market report will be very important for the market trend next week. In view of their high liquidity, Bunds appear to benefit as a safe haven from the deadlock in the USA (chart 18). At the same time, debt also remains top of the agenda in the euro zone and benefits Bunds. Some questions about the rescue package for Greece still remain open on the basis of details currently available. Investors therefore remain cautious and spreads of government bonds for Italy and Spain versus Germany, having dipped briefly around the time of the EU summit, are now sharply higher again (chart 17). However, the first detailed analysis bears out our initial assessment of the rescue plan: The package is good news for the peripheral countries. As soon as the missing details are confirmed, a certain relief should be seen, especially since the supply from the periphery is set to ebb in the coming weeks.

CHART 17: Short-lived relief for the periphery

Ten-year government bond yields, in percent p.a.

CHART 18: Bunds in demand as safe haven

Yields of ten-year US Treasuries and Bunds, in percent p.a.

6,5 6,0 5,5 5,0 4,5 Mrz-11

3,7 3,5 3,3 3,1 2,9 2,7 2,5 Mrz-11 Apr-11 Mai-11 Bunds
Source: Bloomberg, Commerzbank Research

Apr-11

Mai-11 Italy

Jun-11 Spain

Jul-11

Jun-11

Jul-11

Treasuries

Source: Bloomberg, Commerzbank Research

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FX market preview:
Topsy turvy

Antje Praefcke

Tel. Tel. +49 69 136 43834 +49 (0) 136 41250 Alexandra Na Park Lutz Karpowitz You Bechtel

The FX markets are displaying an unusual pattern of behaviour. Despite increased risk aversion, high-yielding currencies such as the AUD and NZD are not under pressure. The main winner of the debt crisis in the euro zone is the Swiss franc though. As the questions which remain unanswered following the EU summit are likely to occupy the markets more than the controversy about raising the debt ceiling in the US, EUR-USD is likely to trend slightly downwards over the coming days. TABLE 4: Expected weekly trading ranges Range EUR-USD EUR-JPY USD-JPY 1.3850-1.4450 108.00-115.00 76.00-80.00 Bias EUR-GBP GBP-USD EUR-CHF Range 0.8500-0.8900 1.6000-1.6600 1.1000-1.1700 Bias

Source: Commerzbank Corporates & Markets

Based on the patterns of behaviour following the financial crisis caused by the collapse of Lehman's, it would be easy to assume that things are slightly topsy turvy at present. Following a brief period of improved sentiment after the EU summit, risk perception has been rising again over the past few days (chart 19). The usually sensitive high-yielding currencies such as AUD and NZD have nonetheless not come under pressure this time round contrary to previous phases of high risk aversion (chart 20). The explanation is obvious: even if many might perceive the dollar to be the smaller risk compared with the euro considering the local debt crisis, it is higher-risk than many other currencies. There is still a danger of the US credit rating being downgraded. Moreover the economic recovery in the US is quite weak at present, which in turn might fuel speculation about renewed measures of quantitative easing in the US if the next round of US data publications disappoints notably. Markets are differentiating according to the current sources of uncertainty and have picked the euro and US dollar. As the questions which remained unanswered following the EU summit are more disconcerting for the markets than the controversy regarding the debt ceiling in the US, EUR-USD is likely to trend downwards over the coming days. On this backdrop, despite increased uncertainty the high-yielding currencies such as AUD and NZD are able to score with arguments such as rate expectations, economic recovery and low debt levels. They seem to be escaping lightly or even enjoy a status as safe haven. However, the Swiss franc remains the main winner in all this, continuously recording new highs. CHART 19: Uncertainty remains high even after EU summit
Index for global risk perception ARPI, daily data

CHART 20: but AUD and NZD continue to appreciate

AUD-USD and NZD-USD spot rates, daily data

2.0

1,2 Financial crisis 1,0 0,8

0,9 0,8 0,7 0,6 0,5

1.0

0.0
0,6 2008 2009 2010 2011 NZD-USD (RHS)

0,4

-1.0 Jan 11

Mar 11

May 11

Jul 11

AUD-USD (LHS)
Source: Bloomberg, Commerzbank Research

Source: Bloomberg, Commerzbank Research

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Equity market preview:

Re-rating requires gradual removal of political event risks

Gunnar Hamann Tel. +49 69 136 29440

Political event risks remain high, threatening to impact on the real economy and thus keeping equity markets at bay. Despite some disappointing results, the current reporting season remains reasonably robust despite first negative implications from the US political impasse. Our expectations, however, imply a gradual removal of political stumbling blocks, triggering a re-acceleration of growth and, after the recent multiple compression on the back of heightened macro uncertainty, a re-rating of equities over the coming months. TABLE 5: Political risks keep equity markets at bay Earnings 11e Performance (%) since Index points Growth (%) P/E 11e Index 30/06 31/03 31/12 current 31/12 current 31/12 current 31/12 DAX 30 7,253 MDAX 10,643 Euro Stoxx 50 2,694 S&P 500 1,305 -1.7 -2.7 -5.4 -1.2 3.0 3.2 -7.5 -1.6 4.9 5.1 -3.5 3.8 668 766 286 98 635 729 294 95 3.3 23.0 8.8 16.4 11.4 25.7 12.3 13.3 10.9 13.9 9.4 13.4 10.9 13.9 9.5 13.3

Source: Commerzbank Corporates & Markets, I/B/E/S

Uncertainty regarding political event risk remains high, stretching from sovereign debt concerns on both sides of the Atlantic to a yet unfinished rate cycle in emerging markets. A protracted failure to successfully address these issues threatens to undermine confidence and, consequently, could spill over to the real economy. Despite individual earnings disappointments, the current reporting season has remained reasonably robust. While a slowing proportion of earnings upgrades is not unusual at this point of the cycle, earnings estimates on balance are still pointing upwards (chart 21). Overall, we believe that the following diverging trends will continue to shape corporate profit growth: Diverging regional trends: Robust emerging markets relative to subdued trading conditions in developed regions such as the US or Europe are already established trends for some time now. Within Europe, however, trading conditions continue to diverge highlighted by robust northern and core European regions in contrast to struggling demand in peripheral countries. Corporate vs. consumer: Demand from cash-rich corporate clients remains generally robust even in the troubled euro zone whereas trading remains tough when dealing with cash strapped consumers In the US or in Europe.

Our central scenario includes the gradual removal of political stumbling blocks over the coming months, leading mature economies out of the current soft-patch. After uncertainty recently contributed to a multiple compression (chart 22), equity markets offer re-rating potential over the remainder of this year.
CHART 21: DAX30

earnings trend remains robust

CHART 22: Macro

uncertainty contributes to recent de-

Upgrades as % of total est. chg. vs. 12m fwd. earnings (index points)

rating
DAX30, 12m fwd. P/E ratio, x

80 70 60 50 40 30 20 10 0 Aug-06 Aug-07

Slowing upgrades - but intact profit trend

800 700 600 500 400 300 Aug-11

14 13 12 11 10 9 8 7 6 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 recent de-rating

8,500 7,500 6,500 5,500 4,500 3,500 Aug-11

Aug-08

Aug-09

Aug-10

Earnings optimism, lhs

Source: Datastream, Commerzbank Research

DAX30 12m fwd. earn., rhs

DAX30 P/E (12m fwd.), lhs

Source: Datastream, Commerzbank Research

DAX30, rhs

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Commerzbank Forecasts
TABLE 6: Growth and inflation Real GDP (%) 2010 2011 USA 2.9 2.3 Canada 3.2 2.8 Japan 4.0 -1.0 Australia 2.7 2.0 Euro area 1.7 2.0 -Germany 3.6 3.4 -France 1.5 2.1 -Italy 1.1 1.3 -Spain -0.1 0.7 United Kingdom 1.3 1.4 Sweden 5.4 4.0 Switzerland 2.6 2.5 Norway 0.3 1.8 TABLE 7: Interest rates (end-of-quarter) 28.07.11 Q3 11 USA Federal funds rate 0.25 0.25 3-months Libor 0.25 0.35 2 years* 0.42 0.60 5 years* 1.53 1.80 10 years* 2.95 3.25 Spread 10-2 years 253 265 Swap-Spread 10 years 11 5 Euro area Minimum bid rate 1.50 1.50 3-months Euribor 1.61 1.95 2 years* 1.25 2.10 5 years* 1.83 2.60 10 years* 2.64 3.25 Spread 10-2 years 139 115 Swap-Spread 10 years 54 30 United Kingdom Bank Rate 0.50 0.50 3-months Libor 0.83 0.85 2 years* 0.68 1.40 10 years* 2.97 3.75 Japan Over night rate 0.10 0.10 3-months Libor 0.20 0.20 2 years* 0.16 0.20 10 years* 1.08 1.25 TABLE 8: Exchange rates (end-of-quarter) 28.07.11 Q3 11 EUR/USD USD/JPY GBP/USD EUR/JPY EUR/CHF EUR/GBP EUR/SEK EUR/NOK AUD/USD NZD/USD USD/CAD 1.43 78 1.63 111 1.15 0.88 9.06 7.73 1.10 0.87 0.95 1.48 83 1.66 123 1.24 0.89 8.80 7.85 1.08 0.82 0.95 2012 2.8 2.5 2.5 3.8 1.8 2.5 2.0 1.2 1.0 2.1 3.0 2.1 2.3 Q4 11 0.25 0.35 0.75 2.00 3.30 255 10 1.75 2.25 2.50 3.00 3.40 90 30 0.75 1.15 1.70 3.90 0.10 0.20 0.25 1.35 Q4 11 1.45 87 1.67 126 1.27 0.87 8.70 7.75 1.06 0.80 0.98 Inflation rate (%) 2010 2011 1.6 3.2 1.8 2.8 -0.7 0.2 2.8 3.3 1.6 2.6 1.1 2.4 1.5 2.3 1.5 2.4 1.8 3.0 3.3 4.7 1.2 3.3 0.7 1.0 2.4 2.0 Q1 12 0.25 0.35 0.90 2.15 3.35 245 20 2.00 2.50 2.70 3.20 3.45 75 30 1.00 1.35 1.90 3.95 0.10 0.20 0.30 1.40 Q1 12 1.42 95 1.65 135 1.30 0.86 8.60 7.70 1.05 0.79 1.01 Q2 12 0.25 0.65 1.40 2.75 3.60 220 30 2.25 2.75 2.85 3.30 3.50 65 30 1.25 1.65 2.20 4.05 0.10 0.20 0.30 1.40 Q2 12 1.39 99 1.64 138 1.33 0.85 8.70 7.65 1.02 0.78 1.03 2012 1.7 The industrialized economies 2.0 are gradually recovering from the bursting of the debt 1.0 bubble. 3.0 While Germany is even 1.9 growing rapidly, many other 2.1 EMU countries are hardly 2.0 growing which is attributable 1.9 to problems in the housing 1.5 sector and the sovereign debt 2.8 crisis. 2.8 Inflationary risks are high due 1.6 to considerable cost pressure. 2.0 Q3 12 0.75 1.25 2.00 3.30 3.75 175 30 2.50 2.90 3.15 3.45 3.55 40 30 1.50 1.95 2.50 4.15 0.10 0.20 0.35 1.45 Q3 12 1.37 103 1.63 141 1.36 0.84 8.80 7.70 1.00 0.77 1.05 The dollar remains under pressure due to the Feds expansionary policy. Thus, EUR-USD should be on an upward trend for now. News on the EMU debt crisis may cause brief, sharp counter moves. In the mid-term, the dollar weakness should come to an end. Through year-end, 10-year US Treasury yields should rise only moderately on the back of rather slow growth. Bund yields are likely to rise more strongly in shorter to intermediate maturities than in the long end. The structural low-yield environment remains in place. We expect the ECB to raise rates each quarter while the Fed remains on hold way into 2012. This should underpin the flattening of the Bund curve relative to US Treasuries. The euro zone government debt crisis is not over yet. Yield spreads will decline only slowly and unevenly in the mid-term. 10Y Bund swap spreads will remain on a level around 30 bps.

Source: Bloomberg. Commerzbank Economic Research; bold change on last week; * Treasuries, Bunds, Gilts, JGBs

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Research contacts (E-Mail: firstname.surname@commerzbank.com)

Chief Economist

Dr Jrg Krmer +49 69 136 23650

Economic Research
Dr Jrg Krmer (Head) +49 69 136 23650 Dr Ralph Solveen (Deputy Head, Germany) +49 69 136 22322 Elisabeth Andreae (Scandinavia) +49 69 136 24052 Dr Christoph Balz (USA, Fed) +49 69 136 24889 Peter Dixon, (UK, BoE), London +44 20 7475 1808 Anthony Karydakis (USA), New York +1 212 895 1993 Jutta Kayser-Tilosen (Euro area) +49 69 136 28656 Wolfgang Leim (Japan) +49 69 136 24525 Dr Ulrike Rondorf (Germany, Switzerland) +49 69 136 45814 Dr Michael Schubert (ECB) +49 69 136 23700 Eckart Tuchtfeld (German economic policy) +49 69 136 23888 Bernd Weidensteiner (USA, Fed) +49 69 136 24527 Christoph Weil (Euro area) +49 69 136 24041

Commodity Research
Eugen Weinberg (Head) +49 69 136 43417 Daniel Briesemann +49 69 136 29158 Carsten Fritsch +49 69 136 21006 Dr Michaela Kuhl +49 69 136 29363 Barbara Lambrecht +49 69 136 22295

Interest Rate Strategy

Christoph Rieger (Head) +49 69 136 87664 Alexander Aldinger +49 69 136 89004 Marcel Bross +49 69 136 87623 Rainer Guntermann +49 69 713 12052 Peggy Jger +49 69 136 87508 Markus Koch +49 69 136 87685 David Schnautz, London +44 20 7475 3229 Benjamin Schrder +49 69 136 87622 Ted Packmohr (Head Cov. Bonds) +49 69 136 87571 Annegret Hasler +49 69 136 87572

FX Strategy
Ulrich Leuchtmann (Head) +49 69 136 23393 Carolin Hecht +49 69 136 41505 Lutz Karpowitz +49 69 136 42152 Peter Kinsella +49 69 136 45847 Thu-Lan Nguyen +49 69 136 82878 You-na Park +49 69 136 42155 Antje Praefcke +49 69 136 43834

Equity Markets Strategy

Gunnar Hamann +49 69 136 29440 Andreas Hrkamp +49 69 136 45925

Dr Michael Schubert (Quantitative) Markus Wallner +49 69 136 21747 +49 69 136 23700

Other publications
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