The assessment comes from the September edition of the monthly allocation report from Storebrand Asset Management's Tactical Allocation Team, led by Olav Chen.
US long-term yields hit highest level since 2007
The yield on 30-year US Treasuries rose to just above 5.3% during the summer, its highest level since 2007, before easing somewhat towards the end of August.
Several factors are contributing to the rise. The Iran conflict has driven commodity prices and inflation expectations higher, while growing US government debt and budget deficits have also played a role. Increased competition for capital and higher issuance volumes from technology companies raising capital for AI investments are adding further pressure.
"The rise in long-term yields is clearly a risk factor, but corporate earnings are also telling a remarkably resilient story. Particularly in the US, companies have continued to deliver strong results and defend margins despite higher energy prices, cost pressures and higher tariffs. That is an important reason why we remain overweight equities", says Olav Chen, Head of Allocation and Global Fixed Income at Storebrand Asset Management.
Hawkish Warsh surprises markets
Expectations for policy rates have also moved higher. At the annual Jackson Hole symposium, new Federal Reserve Chair Kevin Warsh delivered his first speech, placing particular emphasis on inflation remaining too high.
Markets interpreted the message as hawkish. They are currently pricing 17 basis points for the Federal Reserve's 16 September meeting, implying a greater than 50% probability of a 25 basis point rate hike. A total of 38 basis points is priced in by the end of the year and 62 basis points over the next twelve months.
"Although Warsh was appointed by Trump and many had expected this could mean rate cuts ahead, his stance has instead proved surprisingly hawkish", says Chen.
Strong earnings continue to support equities
Despite the rise in yields, global equities continue to advance. The MSCI World Index in local currency terms gained more than 2% in August, reaching another all-time high. It is now up 13% year-to-date, with energy and IT/technology the strongest-performing sectors globally.
The second-quarter earnings season was exceptionally strong, particularly among US-listed companies. Companies appear to have maintained their margins despite high energy prices, cost pressures and higher tariffs, while large-scale AI investment continues to support industrial indicators.
Higher interest rates, geopolitics and concentration risk around AI remain concerns, but Storebrand AM considers the cyclical backdrop solid and remains overweight global equities.
Emerging markets – overweight
Emerging markets have been among the strongest-performing equity markets in 2026. In August, EM equities rose broadly in line with developed markets in local currency terms, but remain around 10 percentage points ahead year-to-date. South Korea and Taiwan have contributed the most this year, even after a pullback in South Korea over the past three months following a strong run, while China has weighed on returns. Storebrand AM remains overweight emerging markets.
Rate expectations rise across major markets
Global government bonds, measured by the JPM GBI, declined marginally in August for the second consecutive month, leaving year-to-date returns negative.
The rise in long-term yields has been a key focus over the summer, but expectations for short-term rates have also moved higher. Markets expect and are pricing two rate hikes in both Japan and the euro area this autumn.
The inflation outlook has also deteriorated as commodity prices have risen, while gas prices have increased again amid low inventories and developments around the Strait of Hormuz.
Storebrand AM maintains a neutral duration position in global government bonds and remains overweight credit.
Storebrand AM asset allocation – September 2026
- Global equities: Overweight (unchanged)
- Norwegian equities: Neutral (unchanged)
- Swedish equities: Neutral (unchanged)
- Emerging market equities: Overweight (unchanged)
- Global government bonds: Neutral duration (unchanged)
- Norwegian government bonds: Neutral duration (unchanged)
- Swedish government bonds: Neutral duration (unchanged)
- Credit: Overweight (unchanged)
- Money market: Underweight (unchanged)