Epstein Secrets

al 10 year yield based on headline CPI 6 5 4 3 1 0 -1 -2 -3 -4 97 99 01 03 05 07 09 11 13 15 17 —US —Japan —Euro Area Source Bloomberg Chart 12: The term premium means that currencies maintain a positive spread between their 2 year and their 10 year interest 2Y10Y goverment bond y

.950 2.970 3.000 3.050 3,100 3,150 USD-ARS 17.12 16.80 17.50 18.50 19.00 19.50 20.00 USD-PEN 3.26 3.30 3.30 3.35 3.40 3.42 3.45 Emerging Europe EUR-PLN 4.25 4.15 4.10 4.10 4.05 4.05 4.00 EUR-HUF 309 305 305 300 295 295 290 EURCZK 26.13 26.25 26.00 26.00 26.00 26.00 25.

s) 200 100% 150 100 50 0 20% 40% 60% 80% -100% -80% -60% -40% -20% 0% 75 78 81 84 87 90 93 96 99 02 05 08 11 Source: Deutsche Bank, Bloomberg The significance of the USD/JPY turn higher should not be understated. It is perhaps the only currency pair that has captured all the major macro

29.6 29.5 29.3 Thailand THB/USD 29.8 30.0 30.0 30.0 (Fwd. Rates) 30.0 30.1 30.3 Source: Datastream, Reuters, Bloomberg Finance LP, DB forecasts Emerging Europe Spot Currency Rate Czech Rep. Koruna/Euro 25.6 25.0 24.5 23.8 (Fwd. Rates) EFTA01464481 Koruna/US$ (Fwd. Rates) Forint/US$ (Fwd. Rates) La

.0 130.0 140.0 80.0 90.0 1.0 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 Source: DB FX Research Source: DB FX Research *Sources: BIS, Bloomberg, Deutsche Bank. Notes: For details on model, see Exchange Rate Perspectives, Jan-13. BEER model is relative PPP adjusted for terms-of-trade and pro

1.23 7.86 7.35 7.25 7.15 - 7.88 7.91 7.97 8.58 8.25 8.05 8.00 - 8.60 8.62 8.66 Source: Datastream, Reuters, Bloomberg Finance LP, DB forecasts Emerging Europe Currency Czech Rep. EUR/CZK (Fwd. Rates) USD/CZK (Fwd. Rates) Hungary EUR/HUF Latin America Currency Argentina USD/ARS (Fwd. Rates) Brazil