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New green issue from Fabege

April began with unease about trade disputes between the US and China, but overall there was greater calm after turbulent markets in both February and March. The credit market stabilised somewhat and activity was higher in both the primary and secondary markets. We did not see the same hesitant attitude as in March, when many new issues were pushed into the market before Easter, says Carnegie Corporate Bond’s fund manager Niklas Edman.

As expected, the Riksbank left its repo rate unchanged at -0.50 percent and indicated that no increase is predicted until towards the end of the year, which is different from the second half of 2018 previously communicated. This may be a challenge if the Riksbank is forced to move before the ECB, as this had caused the market to postpone expectations of the first increase until 2019.

The reporting season began and several big companies have reported results in line with or above expectations, which again intensified the risk appetite on stock exchanges.

Globally, the news is still dominated by Russian sanctions and the trade war between the US and China.

April was relatively calm and we participated in the green new issue from Fabege. Carnegie Corporate Bond A rose 0.03 percent during the month and is up 0.12 percent so far this year. We are maintaining the short duration to minimise interest rate risk in the portfolio and are trying to limit market risk somewhat by largely investing in bonds with shorter maturities, although in some cases we favour an attractive margin over maturity.

Due to a historically high risk appetite combined with geopolitical risks and less expansionary monetary policy, we are maintaining a balanced portfolio as a safeguard against any increase in volatility ahead. As regards fund return, 2017 was a very strong year against the background of ECB support purchases and a generally high risk appetite. We therefore expect a somewhat more normalised return in 2018 based on coupons, rather than rising bond prices, which contributed a large share of the return in 2017.

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