Market outlook July 2018

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We are making no allocation changes going into the month of July.

Global equity markets were mixed during the month of June. We maintain our underweight position in equities and have made no changes to our reginal allocation hence we continue to be overweight Norway, the Nordics, Europe and Emerging Markets while maintaining our underweight stance on the US and Japan.

The fixed income market made a U-turn during the month of June. We saw  an increase in bond yields during the start of the month followed by a move of lower yields as a consequence of  President Trump`s  tariff announcement of approximately $50bn on  imports  from China and plans to restrict  Chinese  investments in American companies. ECB, the FED and Norges Bank held their June meetings. The FED continued to hike rates and ECB communicated an unchanged key policy rate at least through the summer of 2019 while it is expected to see Norges Bank to hike rates during the month of September-18. We have made no changes in our fixed income portfolio and are positioned for an increase in global yields.

Equities

We are carrying a moderate underweight in equities but we continue to have a positive view on cyclical equity exposures. On a regional level, we uphold our positive view on Norway, the Nordics, Europe and Emerging markets while we continue to underweight Japan and the US.

Our sector exposure within technology through the DNB Technology fund continues to show strong performance. The overall sector has continued to deliver solid profitability maintaining an attractive valuation relative to the broader equity market.

Fixed Income

We have made no changes in our fixed income portfolio. We continue to be positioned for an increase in global yields. Our view has been implemented by investing in shorter dated fixed income exposure exemplified by our position in DNB High-Yield.

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