ANZ Morning Note / 29 March 2010 / 1 of 6

                                          ECONOMICS & MARKETS RESEARCH
                                                      ANZ MORNING NOTE
29 MARCH 2010                 OVERNIGHT MARKETS UPDATE
                             • US bond yields declined marginally on Friday on higher demand as investors
ANZ AUSTRALIAN                 found treasuries attractive following three straight days of rise in yields. Month-
MACROECONOMICS,                end buying, negative revision to US GDP growth and no scheduled bond auction
                               for the following week also supported the demand. The yield on 2-year notes
                               decreased 4bps to 1.040%, whilst the 10-year yield declined 3bps to 3.847%.

CONTRIBUTORS                 • Australian bond futures traded inline but underperformed the rebound for US
                               Treasuries at the shorter end of the curve. The implied yield on 3-year bond
Warren Hogan
Chief Economist, Australia     futures was down 1bp to 5.360% (price up 1bp to 94.640) and the implied yield
+61 2 9227 1562                on the 10-year bond futures closed flat at 5.770% (price flat at 94.230).
                             • US equities posted a mixed performance on Friday. The decision of the eurozone
Amy Auster
Head of FX Research            countries to support Greece if needed was a positive, while a downward revision
+61 3 9273 5417                to fourth quarter US GDP growth proved a dampener. The DJIA was up 0.1% to
                               10850, the S&P 500 rose 0.1% to 1167 and the Nasdaq declined 0.1% to 2395.
Mark Pervan
Head of Commodity
                             • European equities declined on Friday on the back of broker downgrades in the
Research                       utility sector, while energy stocks weakened on lower crude oil prices. Pharma
+61 3 9273 3716
                               stocks too edged lower after Germany announced plans to cut patented drug
                               prices. The DJ Euro Stoxx 50 lost 0.2% to 2941, the German DAX declined 0.2%
Tony Morriss
                               to 6120 and the FTSE was 0.4% lower at 5703.
Senior Rates Strategist,         • The Australian SPI 200 Mar 10 futures contract was unchanged at 4924.
Shane Lee                    • The USD weakened overnight as risk apetite improved after the release of a draft
Senior Economist,
+61 2 92264632                 proposal to address Greece’s financial problems. EUR/USD opens stronger              around 1.3480, rising sharply on Friday night. GBP/USD gained 0.8% and starts
Julie Toth                     this week stronger around 1.4960. USD/JPY traded range-bound overnight and
Senior Economist,              opens this morning slightly weaker at 92.50.
+61 3 9273 6252           • The AUD weakened against major crosses overnight. AUD/USD dropped sharply
Dr. Alex Joiner                early in the session, managing to recoup some losses and opens the week around
Economist,                     0.9055. AUD/EUR dropped sharply and trades at 0.6720. AUD/JPY opens lower
+61 3 9273 6123            at 83.70, falling steadily throughout the session and the AUD/NZD trades around
                               1.2830 after trading relatively range bound on Friday.
Amber Rabinov
Economist                    • Crude oil fell on Friday as reports showed US GDP increased by less than
+61 3 9273 4853
                               expected, raising concerns that demand for fuel might decline. WTI futures
                               contract for May 10 fell 0.7% to US$80.00 a barrel.
Melissa Fenech
Research Analyst             • Spot gold was up on speculation that demand for the precious metal would
+61 3 9273 1590
                               increase on rising debt concerns in Europe. The metal was also supported by a
                               weaker USD. Spot gold rose 1.6% to US$1,107.50 an ounce.
Natalie Robertson
Commodity Research           • LME copper increased 1.1% to US$7,515 after reports showed that inventories
Analyst                        on the LME dropped to a two-month low. Other base metals traded mixed with
+61 3 9273 3415      lead and nickel increasing 2.3% and 3.4%, respectively. Aluminium remained
                               unchanged, while zinc declined 0.7%.
                                                                             ANZ Morning Note / 29 March 2010 / 2 of 6

                                         ECONOMICS & MARKETS RESEARCH
                                                     ANZ MORNING NOTE
29 MARCH 2010                • US corn and soybeans rose 0.4% and 1.0%, respectively, as a weaker USD
                               increased the demand for commodities as an alternative investment. Wheat
                               declined 0.4%, to its five-month low, on speculation that global production would
MACROECONOMICS,                increase. Sugar fell 0.3% as countries delayed purchases on expectations that
FX & COMMODITIES               prices would continue to fall. Palm oil futures were 1.6% lower.

                                   Please note that the prices/rates have been updated at 0700 AEST
Warren Hogan
Chief Economist, Australia
+61 2 9227 1562

Amy Auster
Head of FX Research
+61 3 9273 5417

Mark Pervan
Head of Commodity
+61 3 9273 3716

Tony Morriss
Senior Rates Strategist,

Shane Lee
Senior Economist,
+61 2 92264632

Julie Toth
Senior Economist,
+61 3 9273 6252

Dr. Alex Joiner
+61 3 9273 6123

Amber Rabinov
+61 3 9273 4853

Melissa Fenech
Research Analyst
+61 3 9273 1590

Natalie Robertson
Commodity Research
+61 3 9273 3415
                                                  ANZ Morning Note / 29 March 2010 / 3 of 6

                                   ECONOMIC DATA & EVENTS

• US GDP Annualised q/q (4Q T) was revised marginally downwards to 5.6%
  (5.9%, 5.9%). This, however, marked the best performance in six years with
  inventory adjustments accounting for 3.8% of the GDP and business investment
  growing at 19.0%. Business earnings rose 8.0% while exports surged 22.8%,
  contributing significantly to the recovery.
• US GDP Price Index q/q (4Q T): 0.5% (0.4%, 0.4%)
• US GDP Personal Consumption q/q (4Q T): 1.6% (1.7%, 1.7%)
• US GDP Personal Consumption Core Price Index q/q (4Q T):1.8% (1.6%,
• US Uni. of Michigan Consumer Confidence Survey (Mar F) increased to 73.6
  (73.0, 72.5) from the mid-March estimate on lower payroll cuts and an increase in
  stock prices. The index, however, remained flat compared to February, as a rise in
  the current conditions sub-index was offset by a fall in the expectation sub-index.
• UK Business Investment q/q (4Q F) fell 4.3% (-5.8%, -5.8%), the sharpest
  drop since 2000, as investments in manufacturing and construction sectors
  declined to its lowest levels in more than a decade.
• UK Business Investment y/y (4Q F): -23.5% (-24.1%)
• US Federal Reserve Board Governor Daniel Tarullo commenting on release
  of bank-supervision data: “Increased transparency could be an important
  addition to the information available to investors and counterparties of the largest
  institutions…will be most effective if market participants have adequate
  information with which to make informed judgments.”
• US Federal Reserve Board Governor Kevin Warsh said: “Taking account of
  the broad range of economic and financial conditions, there is no wonder that the
  electorate in the United States and abroad is unnerved…Significant economic
  challenges persist…The Federal Reserve must do its utmost to stay foursquare
  within its role as liquidity provider.”
• EU ECB Executive Board Member Lorenzo Bini Smaghi on IMF involvement
  in Greece: “It’s not ideal or the best solution…But politically that’s what’s been
  decided and we will have to make it work.”
• EU Luxembourg Prime Minister Jean-Claude Juncker on the decision to
  support Greece: “I am very satisfied with this decision, though I would have
  preferred a purely Europe-based solution…The biggest part of the financing will
  happen through the 16 euro nations…this would also have worked without a
  participation from the IMF…I completely excluded any measure that would have
  been based purely on IMF aid…The Greek crisis showed that we don’t have an
  instrument at our disposal…The idea suggested by Germany for a European
  Monetary Fund is a good initiative.”
• EU ECB Vice President-elect Vitor Constancio on IMF’s aid to Greece: “I
  said at the European Parliament last Monday that I think the IMF is not necessary
  and that it should not have a role in dealing with the Greek problem.”
• EU ECB Vice President Lucas Papademos on an agreement on Greece:
  “This is a positive one and it establishes a mechanism for financial support that
  may be used by Greece if needed but it is not expected that this facility will be
  activated, taking into account the commitment and determination of the Greek
  authorities to implement the necessary measures.”
• PBoC adviser Fan Gang: “China may resume a managed float of its exchange
  rate, particularly if the uncertainty of the overall post-crisis economic situation
                                               ANZ Morning Note / 29 March 2010 / 4 of 6

                                 ECONOMIC DATA & EVENTS

• JP: Large Retailers' Sales – (Feb): Market: -5.4 Last: -5.7% - 23:50 GMT (10.50
• JP: Retail Trade y/y – (Feb): Market: 1.7 Last: 2.3% - 23:50 GMT (10.50 AEST)
• JP: Retail Trade m/m – (Feb): Market: -1.2 Last: 2.0% - 23:50 GMT (10.50 AEST)
• CH: Leading Index – (Feb): Last: 104.80
• EU: Business Climate Indicator – (Mar): Last: -0.98 - 09:00 GMT (20.00 AEST)
• EU: Euro-Zone Indust. Confidence – (Mar): Market: -11 Last: -13 - 09:00 GMT
  (20.00 AEST)
• EU: Euro-Zone Consumer Confidence – (Mar F): Market: -17 Last: -17 - 09:00
  GMT (20.00 AEST)
• EU: Euro-Zone Economic Confidence – (Mar): Market: 97.4 Last: 95.9 - 09:00
  GMT (20.00 AEST)
• EU: Euro-zone Services Confidence – (Mar): Market: 2 Last: 1 - 09:00 GMT
  (20.00 AEST)
• EU: ECB's Orphanides Speaks in Surrey - 16:45 GMT (03.45 AEST)
• GE: Consumer Price Index m/m – (Mar P): Market: 0.3% Last: 0.4%
• GE: Consumer Price Index y/y – (Mar P): Market: 0.9% Last: 0.6%
• GE: CPI - EU Harmonised m/m – (Mar P): Market: 0.3% Last: 0.4%
• GE: CPI - EU Harmonised y/y – (Mar P): Market: 0.9% Last: 0.5%
• GE: Import Price Index m/m – (Feb): Market: 0.4% Last: 1.7%
• GE: Import Price Index y/y – (Feb): Market: 2.0% Last: 1.4%
• UK: Net Consumer Credit – (Feb): Market: 0.4B Last: 0.5B - 08:30 GMT (19.30
• UK: Net Lending Sec. on Dwellings – (Feb): Last: 1.5B - 08:30 GMT (19.30 AEST)
• UK: Mortgage Approvals – (Feb): Market: 48.2K Last: 48.2K - 08:30 GMT (19.30
• UK: M4 Money Supply m/m – (Feb F): Last: 0.2% - 08:30 GMT (19.30 AEST)
• UK: M4 Money Supply y/y – (Feb F): Last: 3.6% - 08:30 GMT (19.30 AEST)
• UK: BoE’s Dale speaks in Surrey - 16:45 GMT (03.45 AEST)
• UK: Nat'wide House prices m/m – (Mar): Market: 0.2% Last: -1.0%
• UK: Nat'wide House prices y/y – (Mar): Market: 8.2% Last: 9.2%
• US: Personal Income – (Feb): Market: 0.1% Last: 0.1% - 12:30 GMT (23.30
• US: Personal Spending – (Feb): Market: 0.3% Last: 0.5% - 12:30 GMT (23.30
• US: PCE Deflator y/y – (Feb): Market: 1.8% Last: 2.1% - 12:30 GMT (23.30
• US: PCE Core m/m – (Feb): Market: 0.1% Last: 0.0% - 12:30 GMT (23.30 AEST)
• US: PCE Core y/y – (Feb): Market: 1.3% Last: 1.4% - 12:30 GMT (23.30 AEST)
• US: Treasury’s Geithner speaks - 14:00 GMT (01.00 AEST)
• US: Dallas Fed Manf. Activity – (Mar): Last: -0.1% - 14:30 GMT (01.30 AEST)
                                                                                                 ANZ Morning Note / 29 March 2010 / 5 of 6

                                                                                                      MARKET TABLES

                                              LEVEL          CHANGE                                     LEVEL            CHANGE
               US 2y note                                                         US 2y swap
                                              1.040               -4.0                                   1.19                 -3.8
               US 5y note                                                         US 5y swap
                                              2.587               -4.4                                   2.71                 -4.8
              US 10y note                                                         US 10y swap
                                              3.847               -3.1                                   3.79                 -4.1
              US 30y bond                                                         AUS 3y swap
                                              4.746               -1.2                                   5.51                 -6.7
           US 2y swap spread                                                      AUS 5y swap
                                              14.63               2.2                                    5.85                 -4.4
           US 5y swap spread                                                     AUS 10y swap
                                              11.00               1.9                                    6.17                 0.3
          US 10y swap spread                                                      NZ 3y swap
                                              -5.75               1.5                                    4.73                 0.0
                 AUS 3y                                                           NZ 10y swap
                                             94.640               1.0                                    5.91                 -1.0
                AUS 10y                                                           AUS 3m bills
                                             94.230               -0.5                                   4.39                 -1.3
              US 3m Libor                                                         NZ 3m bills
                                              0.289               0.1                                    2.67                 0.0
Source: ANZ and Bloomberg. Change in basis points

                                             LAST       CHANGE                 OVERNIGHT RANGE                   CURRENT VS AUD
                                            0.9062       0.0022                 0.9002 - 0.9114                           -
                                           71.4000            -                          -                                -
                                            0.7059       0.0019                 0.7016 - 0.7092                        1.2839
                                            1.3485       0.0075                 1.3325 - 1.3425                        0.6720
                                             92.19      -0.3300                   92.31 - 92.9                         83.56
                                            1.4953       0.0056                 1.4805 - 1.4893                        0.6060
                                            1.0252      -0.0014                 1.0208 - 1.0304                        0.9290
                                            1.0586      -0.0066                 1.0637 - 1.0725                        0.9593
                                           81.6090      -0.5610                 0.9002 - 0.9114                           -
Source: ANZ and Bloomberg. * As at 4pm AEST yesterday. Change in pips.

#NB. Overnight ranges for European and New York trading sessions (0700-21:00 GMT)

                                         LAST        CHANGE                                              LAST                 CHANGE
             Dow Jones                                                    Gold ($US/ounce)
                                         10850        0.1                                               1107.5                  1.6
                 S&P                                                     Copper ($US/tonne)
                                         1167         0.1                                               7515.0                  1.1
               Nasdaq                                                    Nickel ($US/tonne)
                                         2395         -0.1                                             23600.0                  3.4
              FTSE 100                                                       CRB Index
                                         5703         -0.4                                               267.3                 -0.2
                 DAX                                                      Oil ($US/barrel)
                                         6120         -0.2                                               80.00                 -0.7
Source: ANZ and Bloomberg. Change in %.

*NB. Indicative levels only. Some base metal prices may not be in real time. Please speak to your ANZ representative if you
require the latest market pricing.
                                                                                                   ANZ Morning Note / 29 March 2010 / 6 of 6

                                                                                                IMPORTANT NOTICE

Australia and New Zealand Group Limited is represented in:

AUSTRALIA                                                                UNITED STATES OF AMERICA
Australia and New Zealand Banking Group Limited                          ANZ Securities, Inc. is a member of FINRA ( and
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ABN 11 005 357 522
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UNITED KINGDOM BY:                                                       NEW ZEALAND BY:
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40 Bank Street, Canary Wharf, London, E14 5EJ, United Kingdom            Telephone +64 4 802 2000
Telephone +44 20 3229 2121       Fax +44 20 7378 2378

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