EFTA01459730

5 February 2016 Focus Europe: Dark clouds. no storm yet Central Banks & Financial Forecasts Euro Area We expect a 10bp deposit rate cut in March. Unless data surprise to the upside, a temporary acceleration in QE seems likely. If data surprise to the downside, this might not even be a front-loading but an increase in the QE envelope. The ECB also has an opportunity to think about a negative rate shield. UK We recently updated our call. Our view of liftoff in May 2016 was becoming difficult to justify with inflation rising slowly, wages disappointing, growth slower and financial markets fragile. We now see the first hike in November. Switzerland The SNB left policy on hold at its last meeting with rates well below zero. We see further gradual depreciation of CHF vs. EUR going forward. Sweden In December, the Riksbank left its rates profile broadly unchanged, suggesting rates will remain sub-zero until end-2017. Norway Norges Bank surprised with a rate cut in September. We expect a final further 25bp rate cut this quarter. Denmark Denmark was forced to cut its deposit rate four times last year, 10bp of which was reversed in January (to -0.65%). We expect the DKK ERMII peg to hold. Po The NBP cut by 50bps at the March meeting and signaled the easing cycle had ended. We see rates on hold for the coming quarters with the longer-term outlook complicated by the appointment of a new MPC in early 2016. Hungary The NBH signaled that the easing cycle is now over and that the policy rate will remain at the current level for a very long time. We do not expect any rate hikes before 2017. Czech Republic The CNB recently confirmed it had intervened to defend the 27/EUR floor. With sterilization costs minimal and intervention probably modest, we expect the floor is here to stay for the coming quarters. inanctal Forecasts Euro Area LatOtil Mit Jun IC out.; to Reg rate 0.06 0.05 0.06 0.05 3m Euribor 0.17 -0.20 -0.25 .0.15 I0Y govt bond 0.25 0.50 0.70 1.05 EUR/USD 1.12 1.05 1.02 0.95 UK Bank Rate 0.50 0.50 0.50 0.75 3m Libor 0.59 0.61 0.62 0.91 I0Y govt bond 1.57 1.70 1.80 2.10 G8P/USD 1.46 1.46 1.40 1.28 EUR/GBP 0.77 0.72 0.73 0.74 Switzerland 3m Libor Tgt 0.75 -0.75 -0.75 -0.75 EUR/CHF 1.12 1.08 1.10 1.12 Sweden Repo rate -0.35 -0.35 -0.35 -0.35 EUFUSEK 9.45 9.10 8.90 8.75 Norway Daposil rate 0.75 0.75 0.60 0.50 EUWN0K 9.54 9.58 9.57 9.21 Denmark Lending rate 0.05 0.05 0.05 0.05 EUWDKK 7.46 7.46 7.46 7.46 Poland 2Ny repo Mkt 1.50 1.50 1.50 1.50 EUR/PLN 4.43 4.43 4.37 4.25 Hungary Base rate 1.35 1.35 1.35 1.35 EUFVHUF 310.5 316.3 317.5 320.0 Czech Rep. Repo rate 0.05 0.05 0.05 0.05 EUR/CIK 27.0 27.1 27.1 26.0 Morno Japan 0/N Call Rate .0.10 -0.05 -0.05 -0.15 3m Tibor 0.15 0.16 0.15 0.15 I0Y govt bond 0.60 0.20 0.20 0.20 USD/JPY 118 123 125 128 US Fed Funds Elt 0.375 0.625 0.875 1.125 3m Libor 0.62 0.83 1.08 1.33 TOY govt bond 1.82 2.00 2.25 1.75 sans DO, abeerdip *SW LP, Nainl Cent Matt Deutsche Bank AG/London Page 23 CONFIDENTIAL — PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0120379 CONFIDENTIAL SDNY_GM_00266563 EFTA01459730