Amid a backdrop of positive technicals and emerging late-cycle behavior, high starting yields should anchor returns once again in 2026.

After a year of strong outperformance relative to U.S. markets, international equities are continuing their comeback following a prolonged period of underperformance. Year-to-date returns (in USD terms) highlight the rotation: - MSCI Korea: +35.28% - MSCI Emerging Markets: +10.78% - MSCI Japan: +10.23% - MSCI Europe: +4.93% - S&P 500: -0.03%

The market moved to a more defensive posture and yields declined as rate cut expectations rose.

With spreads tight and issuance set to rise, elevated all-in yields remain the key force anchoring investment grade credit returns in 2026.

Highlights from the week of February 6 – February 12, 2026.

December retail sales showed clear signs of cooling after months of resilience amid a turbulent economic backdrop. The latest report showed sales were flat month over month, falling short of expectations for 0.4% growth and marking a sharp deceleration from November’s robust 0.6% increase. Weakness was concentrated in discretionary categories such as furniture, apparel, and electronics, while spending proved more resilient in necessities and home related materials. Soft auto spending was also a key contributor to December’s flat reading. Together, these trends suggest that the effects of tariffs and a softening labor market are beginning to filter through to consumer behavior, raising concerns that households may be approaching the limits of their spending capacity.

​​Recent liquidity events related to portfolio companies in which PIF invests through its private equity holdings​.

Investors rotated into more defensive, value sectors and drove up the price of gold.

Midway through 4Q25 earnings, the aggregate earnings growth rate stands at 13.9%, meaningfully higher than estimates from the start of the period. If this pace continues, it would represent the fifth consecutive quarter of double-digit earnings growth, a clear testament to the strength of the bull market. Thus far, 72% of companies have reported positive earnings, while 80% have posted positive sales growth. In addition, 81% of companies have surprised the market with positive earnings, providing another indication of broad-based strength. Industrials, technology, and financials have led, while consumer discretionary and real estate have continued to lag.

Unlike paper gains, realized PE distributions provide tangible value and fuel new compounding opportunities—key components of sustainable total return.