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Treasury Daily Market Report - 4 March 2010 Page 1

Headline News

• Australia trade deficit narrowed to -

A$1.2 bln Jan vs -A$2.2 bln Feb, exports

+1.4%

• Japan MOF capex survey showed Q4

investment narrowed to -17.3% y/y

from -24.8%

• Fed's Beige Book: economy improved

modestly despite storm, price pressures

limited

• NYMEX crude rebounded above

$80.00 bbl despite large build in EIA

crude inventories

• U.S. ISM services rose to 53.0 in Feb,

above median 51.0 vs 50.5 in Jan

• Treasury yields climbed after ADP,

ISM-NMI; stocks rebounded into the

green

• U.S. ADP employment survey fell just

20k in Feb, below median -10k vs -60k

Jan

Daily Commentary

The dollar fell sharply in N.Y. trade on Wednesday, as economic data

came in as-expected or better, resulting in another advance on Wall

Street. The dollar likely pulled back some on the uptick in risk appetite,

though it appeared a decent cable and EUR-USD short squeeze were

the major drivers. With prospects for some sort of solution to the Greek

fiscal crisis apparently improved, the euro charged over 100 points

higher versus the dollar, making two-week highs. Cable meanwhile,

tripped buy-stops around 1.5070-80. The dollar bloc firmed as well, as

commodities surged. There was virtually no FX market reaction to the

Beige Book report, which overall outlined signs of improvement in the

economy, though continued to reveal trouble in real estate and labor

markets.

The 1.3680-90 level (February 26 and 23 highs), tripped a decent round

of EUR-USD buy-stop activity, which has resulted in a move to 1.3720.

With some hope that Greek's fiscal crisis will be sorted out one way or

another, it appears EUR-USD risk will remain to the upside for now. Market

shorts have been seen as perhaps over extended of late, and as a

result, more gains may be in the cards.

Yields were propped up from lows following a series of better data results

and hopes that Greek's austerity measures would be implemented,

despite rumors floating around the PM Papandreou might not survive the

ordeal. MBA mortgage apps were up, the ADP employment survey fell

less than expected and ISM services jumped. Fedspeak from hawks and

doves alike did not sound as if there was any rush to hike rates, while

the Beige Book report balanced out a modest improvement in growth

against some storm-related weakness, along with limited inflation pressures.

Australia's trade deficit narrowed to -A$1,176 mln in January, better

than expected (Reuters median -A$1.5 bln) following a -A$2,174

mln shortfall in December. Exports rose 1.4% after a 4.0% gain in

December. Imports fell 3.3% following a 5.8% drop. While the near

halving of December's elevated deficit in January and the back to

back gains in exports is quite encouraging, net exports remain a key

source of uncertainty for Australia's growth outlook this year. Of

course with Australia's key trading partners, notably China, outperforming

on the world stage, the potential drag from trade on GDP

remains smaller compared to other export sensitive economies.

Bank of Japan policy board member Tadao Noda warned that BoJ

buying of JGB's, would push up LT interest rates, if seen as debt

monetisation, In a speech Thursday, Noda gave a counterargument

to government pressure for additional central bank stimulus

measures as Japan faces lingering deflation. The BoJ has resisted

calls for additional BoJ purchases of debt, and argued that if

seen as monetizing debt it could risk pushing up 10-year JGB yields

from below 1.50%. The BoJ considers it previous efforts at quantitative

easing as largely unsuccessful in helping escape from deflation,

and central bank does not want to be seen as monetizing the deteriorating

Japanese fiscal deficits. It widely seen as maintaining its

target o/n interest rate at near zero, indefinitely, in the face of continuing

deflation, with the February core CPI at -1.3% y/y.

Oman will keep interest rates close to zero for the foreseeable future

to prevent a further surge of liquidity into the Gulf country's

banking system, the central bank announced yesterday.

• Greece announced EUR 4.8 bln measures,

including VAT hike, public sector

wage cuts

• U.S. MBA mortgage applications rebounded

14.6%, refis +17.2%, purchases

+9.0%

• Canadian bear flattening accelerated,

CAD rallied as rate hike projections

brought fwd

• Oman plans to maintain int. rates low

Schedule of Forthcoming Key Economic Releases and Events

Thursday, 04 th March

US – Initial Claims

US – Factory Orders

US – Monster Employment Report

US – Pending Home Sales Index

UK – BoE Rate Announcement

EU – ECB Rate Announcement

JP – Trade Balance

Friday, 05 th March

US – Nonfarm Payrolls

US – Unemployment Rate

UK – PPI

Monday, 08 th March

GER – Retail Sales

GER – Industrial Production

CA – Housing Starts

Tuesday, 09 th March

US – ABC Consumer Comfort Index

US – Redbook 03/06

UK – BRC Retail Sales

UK – Trade Balance

JP – Leading Index

JP – Machinery Orders

SW – Consumer Price Index

Wednesday, 10 th March

US - MBA Mortgage Applications

US – EIA Crude Oil Stocks

UK – Industrial production

UK – Manufacturing Production

GER – Trade Balance

GER – Consumer Price Index

JP - GDP Q/Q –2nd Prelim

This document has been prepared and issued by Ahli United Bank B.S.C. (“AUB”) which is regulated by the Central Bank of Bahrain. All recipients of this document should note that it is being furnished to them solely for information purposes and may not be reproduced

or redistributed to any other person without the permission of AUB. Although information has been obtained from and is based upon sources believed to be reliable, AUB does not warrant its accuracy and it may be incomplete or condensed. All opinions and estimates

constitute AUB’s judgement at the date of publication and are subject to change without notice. AUB does not advise as to the suitability or otherwise of this information and provides the information to recipients exclusively on the basis that they have sufficient

knowledge, experience and/or professional financial, legal, tax and other advice to make an independent assessment thereof.


Treasury Daily Market Report - 4 March 2010 Page 2

Foreign Exchange Snapshot

CCY Today Previous Change % Change 2010 High 2010 Low

USD TW Index 80.06 80.32 -0.26 -0.32% 81.106 76.801

EUR/USD 1.3687 1.3641 0.0046 0.34% 1.4582 1.3432

GBP/USD 1.5085 1.5053 0.0032 0.21% 1.6457 1.4784

USD/JPY 88.48 88.74 -0.2600 -0.29% 93.76 88.33

USD/CHF 1.0691 1.0738 -0.0047 -0.44% 1.0898 1.0133

EUR/GBP 0.9074 0.90615 0.0012 0.13% 0.9148 0.8596

AUD/USD 0.9023 0.9046 -0.0023 -0.25% 0.9330 0.8578

USD/CAD 1.0319 1.0343 -0.0024 -0.23% 1.0738 1.0226

USD/INR 45.80 45.88 -0.09 -0.19% 46.87 45.12

USD/IQD 1169.90 1168.90 1.00 0.09% 1170.10 1150.00

USD/SAR 3.7502 3.75015 0.0000 0.00% 3.7653 3.7401

USD/BHD 0.37700 0.37700 0.00000 0.00% 0.3770 0.3770

USD/KWD 0.28815 0.28880 -0.00065 -0.23% 0.29120 0.28450

USD/QAR 3.6398 3.6445 -0.0047 -0.13% 3.6445 3.6350

USD/OMR 0.38500 0.385015 -0.00002 -0.01% 0.38503 0.38410

USD/EGP 5.4790 5.4830 -0.0040 -0.07% 5.49500 5.42000

Equity Market Snapshot

Index

Last

Close

Prev.

Close

Daily

Chg

% Daily

Chg

2010

% Chg

52 Wk

High

Official Interest Rates

US Discount Rate 0.75% 18-Feb-10 Fed Funds 0.25% 16-Dec-08

ECB Lending Rate 1.75% 07-May-09 ECB Repo 1.00% 07-May-09

BOE Lending Rate 0.50% 05-Mar-09 UK Base Rate 0.50% 05-Mar-09

Bahrain Repo 2.25% 15-Sep-09 Deposit Facility 0.25% 18-Dec-08

Qatar Repo 5.55% 03-Jul-06 Deposit Facility 2.00% 05-May-08

Kuw ait Discount Rate 2.50% 08-Feb-10 Kuw ait 1M Repo 2.00% 08-Feb-10

Saudi Repo 2.00% 19-Jan-09 Reverse Repo 0.25% 16-Jun-09

Corridor Rate 9.75% 17-Sep-09 Egypt O/N Dep 8.25% 17-Sep-09

FOMC Meetings 2009/10

12-Aug-09 unchanged

23-Sep-09 unchanged

04-Nov-09 unchanged

16-Dec-09 unchanged

27-Jan-10 unchanged

16-Mar-10

28-Apr-10

23-Jun-10

Money Market Rates

ECB Meetings 2009/10

03-Sep-09 unchanged

08-Oct-09 unchanged

05-Nov-09 unchanged

03-Dec-09 unchanged

14-Jan-10 unchanged

04-Feb-10 unchanged

04-Mar-10

08-Apr-10

Libor Today Previous Change 2010 High 2010 Low

USD 3Mth 0.25194 0.25194 0.00000 0.25438 0.24875

USD 6Mth 0.38319 0.38319 0.00000 0.43438 0.38250

USD 12Mth 0.83438 0.83625 -0.00187 0.99375 0.83438

EUR 3Mth 0.65500 0.65500 0.00000 0.70000 0.65500

EUR 6Mth 0.95700 0.95800 -0.00100 0.99600 0.95700

EUR 12Mth 1.21400 1.21500 -0.00100 1.25100 1.21400

GBP 3Mth 0.64375 0.64250 0.00125 0.64438 0.60938

GBP 6Mth 0.87000 0.86750 0.00250 0.87000 0.84250

GBP 12Mth 1.30000 1.29875 0.00125 1.30000 1.25375

AUB Bhibor 3Mth 1.30000 1.30000 0.00000 1.40000 1.00000

AUB Bhibor 6Mth 1.50000 1.50000 0.00000 1.60000 1.20000

AUB Bhibor 12Mth 2.00000 2.00000 0.00000 2.20000 1.60000

SAR 3Mth 0.76625 0.76750 -0.00125 0.77400 0.76475

SAR 6Mth 1.02250 1.03075 -0.00825 1.05000 1.02250

SAR 12Mth 1.22875 1.23656 -0.00781 1.32263 1.22875

This document has been prepared and issued by Ahli United Bank B.S.C. (“AUB”) which is regulated by the Central Bank of Bahrain. All recipients of this document should note that it is being furnished to them solely for information

purposes and may not be reproduced or redistributed to any other person without the permission of AUB. Although information has been obtained from and is based upon sources believed to be reliable, AUB does not warrant its accuracy

and it may be incomplete or condensed. All opinions and estimates constitute AUB’s judgement at the date of publication and are subject to change without notice. AUB does not advise as to the suitability or otherwise of this information

and provides the information to recipients exclusively on the basis that they have sufficient knowledge, experience and/or professional financial, legal, tax and other advice to make an independent assessment thereof.

52 Wk

Low

Dow Jones 10,397 10,406 -9.22 -0.09% -0.30% 10,730 6,470

NASDAQ 2,281 2,281 -0.11 0.00% 0.51% 2,320 1,266

FTSE 5,533 5,484 49.15 0.90% 2.22% 6,535 3,512

Nikkei 10,187 10,238 -51.28 -0.50% -3.41% 10,982 9,912

S&P 1,119 1,118 0.48 0.04% 0.33% 1,150 667

Kuw ait SE 7,399 7,406 -7.20 -0.10% 5.62% 7,441 6,878

Dubai SE 1,573 1588 -15.21 -0.96% -13.09% 1,877 1,540

Saudi SE 6,479 6,445 33.89 0.53% 5.82% 6,568 4,130

Qatar SE 6,782 6,848 -66.03 -0.96% -2.55% 12,636 4,230

Bahrain SE 1,503 1,504 -0.93 -0.06% 3.06% 1,539 1,444

Muscat SE 6,675 6,690 -14.57 -0.22% 5.04% 6,820 6,368

Egypt Hermes 623 615 7.87 1.28% 8.59% 647 580

AUB Group Equity

AUB Stock - Bahrain (US$) 0.595 0.590 0.005 0.85% 36.78% 0.620 0.348

AUB Stock - Kuw ait (Kw D) 0.176 0.174 0.002 1.15% 35.38% 0.182 0.105

AUB Stock - Kuw ait (US$ Eqv) 0.611 0.602 0.008 1.38% 34.83% 0.632 0.364

BKME Stock - (Kw D) 0.520 0.520 0.000 0.00% 1.96% 0.570 0.350

ABQ Stock - (QAR) 50.00 55.00 -5.000 -9.09% 6.38% 55.60 34.50

AUB (Egypt) Stock - (EGP) 37.00 37.00 0.000 0.00% 3.85% 36.50 10.15

AHLI Bank Oman Stock - (OMR) 0.249 0.251 -0.002 -0.80% 14.75% 0.254 0.111

KMEFIC Stock (Kw D) 0.079 0.079 0.000 0.00% -9.20% 0.231 0.087


Treasury Daily Market Report - 4 March 2010 Page 3

Capital & Bond Market Snapshot

Swaps Today Previous Change

Futures Calendar Spreads

2010

High

2010

Low

Benchmark

Govt Yields

USD 2Yr 1.04 1.04 0.00 1.35 1.04 0.80

USD 3Yr 1.63 1.63 0.00 1.98 1.63 1.31

USD 5Yr 2.52 2.56 -0.04 2.91 2.52 2.25

USD 10Yr 3.64 3.68 -0.04 3.93 3.64 3.61

USD 30Yr 4.40 4.42 -0.02 4.60 4.37 4.58

EUR 2Yr 1.48 1.46 0.03 1.86 1.46 0.85

EUR 3Yr 1.90 1.83 0.07 2.31 1.83 1.32

EUR 5Yr 2.48 2.46 0.02 2.81 2.45 2.15

EUR 10Yr 3.38 3.37 0.01 3.59 3.34 3.14

GBP 2Yr 1.65 1.60 0.05 1.98 1.53 1.08

GBP 3Yr 2.22 2.16 0.06 2.62 2.12 1.92

GBP 5Yr 3.01 2.95 0.06 3.37 2.92 2.82

GBP 10Yr 3.93 3.92 0.01 4.12 3.91 4.03

SAR 2Yr 1.41 1.53 -0.12 1.76 1.29 0.89

SAR 3Yr 1.96 2.12 -0.16 2.37 1.96 1.34

SAR 5Yr 2.95 3.05 -0.10 3.35 2.91 2.49

SAR 10Yr 4.35 4.47 -0.12 4.67 4.20 3.68

Swap

Spreads

Change

2010

High

2010

Low

Govt

Spreads

US 2Yr / 5Yr 1.48 1.52 -0.04 1.63 1.48 1.45

US 2Yr / 10Yr 2.60 2.64 -0.04 2.71 2.55 2.81

US 10yr / 30yr 0.77 0.74 0.02 0.77 0.60 0.97

US / EUR 10yr 0.26 0.31 -0.05 0.43 0.26 0.27

3 M th USD GBP EUR

Mar-10 Jun-10 0.08% 0.09% 0.13%

Jun-10 Sep-10 0.17% 0.17% 0.19%

Sep-10 Dec-10 0.28% 0.30% 0.20%

Dec-10 Mar-11 0.34% 0.35% 0.20%

Mar-11 Jun-11 0.36% 0.38% 0.21%

Jun-11 Sep-11 0.35% 0.36% 0.21%

Commodities

Commodity Today Previous Change % Change 2010 High 2010 Low

RJ CRB Index 277.71 275.13 2.5800 0.94% 293.75 200.16

WTC 80.88 79.59 1.2900 1.62% 83.09 71.14

Gold ($) 1136.33 1133.90 2.4300 0.21% 1154.75 1065.90

Silver ($) 17.18 16.98 0.2000 1.18% 18.83 15.14

Platinum ($) 1575 1579 -4.5000 -0.28% 1657 1463

Interest Rate Futures

6 M th USD GBP EUR

Mar-10 Sep-10 0.25% 0.26% 0.31%

Jun-10 Dec-10 0.45% 0.47% 0.39%

Sep-10 Mar-11 0.63% 0.65% 0.40%

Dec-10 Jun-11 0.70% 0.73% 0.41%

Mar-11 Sep-11 0.71% 0.74% 0.42%

12 M th USD GBP EUR

Mar-10 Mar-11 0.87% 0.91% 0.71%

Jun-10 Jun-11 1.15% 1.20% 0.79%

Sep-10 Sep-11 1.34% 1.39% 0.82%

USD Implied GBP Implied EUR Implied

3m Libor 0.25% 0.64% 0.66%

Mar-10 99.740 0.26% 99.330 0.67% 99.340 0.66%

Jun-10 99.665 0.34% 99.240 0.76% 99.215 0.78%

Sep-10 99.495 0.50% 99.070 0.93% 99.030 0.97%

Dec-10 99.210 0.79% 98.770 1.23% 98.830 1.17%

Mar-11 98.870 1.13% 98.420 1.58% 98.635 1.37%

Jun-11 98.510 1.49% 98.040 1.96% 98.425 1.58%

Sep-11 98.160 1.84% 97.680 2.32% 98.210 1.79%

Dec-11 97.820 2.18% 97.350 2.65% 97.980 2.02%

Mar-12 97.520 2.48% 97.070 2.93% 97.795 2.21%

Jun-12 97.225 2.78% 96.810 3.19% 97.605 2.40%

Sep-12 96.960 3.04% 96.580 3.42% 97.420 2.58%

Dec-12 96.700 3.30% 96.360 3.64% 97.230 2.77%

Futures Currency Spreads

Implied 6m Libor (from Futures)

USD GBP EUR

6m Libor 0.38% 0.87% 0.96%

Mar-10 0.30% 0.72% 0.72%

Jun-10 0.42% 0.85% 0.88%

Sep-10 0.65% 1.08% 1.07%

Dec-10 0.96% 1.41% 1.27%

Mar-11 1.31% 1.77% 1.47%

Jun-11 1.67% 2.14% 1.68%

Sep-11 2.01% 2.49% 1.91%

Dec-11 2.33% 2.79% 2.11%

Mar-12 2.63% 3.06% 2.30%

Jun-12 2.91% 3.31% 2.49%

Sep-12 3.17% 3.53% 2.68%

GBP/USD EUR/USD GBP/EUR

3m Libor 0.39% 0.40% -0.01%

Mar-10 0.41% 0.40% 0.01%

Jun-10 0.42% 0.45% -0.03%

Sep-10 0.43% 0.47% -0.04%

Dec-10 0.44% 0.38% 0.06%

Mar-11 0.45% 0.23% 0.21%

Jun-11 0.47% 0.09% 0.38%

Sep-11 0.48% -0.05% 0.53%

This document has been prepared and issued by Ahli United Bank B.S.C. (“AUB”) which is regulated by the Central Bank of Bahrain. All recipients of this document should note that it is being furnished to them solely for information

purposes and may not be reproduced or redistributed to any other person without the permission of AUB. Although information has been obtained from and is based upon sources believed to be reliable, AUB does not warrant its accuracy

and it may be incomplete or condensed. All opinions and estimates constitute AUB’s judgement at the date of publication and are subject to change without notice. AUB does not advise as to the suitability or otherwise of this information

and provides the information to recipients exclusively on the basis that they have sufficient knowledge, experience and/or professional financial, legal, tax and other advice to make an independent assessment thereof.


Treasury Daily Market Report - 4 March 2010 Page 4

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This document has been prepared and issued by Ahli United Bank B.S.C. (“AUB”) which is regulated by the Central Bank of Bahrain. All recipients of this document should note that it is being furnished to them solely for information

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and it may be incomplete or condensed. All opinions and estimates constitute AUB’s judgement at the date of publication and are subject to change without notice. AUB does not advise as to the suitability or otherwise of this information

and provides the information to recipients exclusively on the basis that they have sufficient knowledge, experience and/or professional financial, legal, tax and other advice to make an independent assessment thereof.

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