Sequoia

*Data correct as: 01/31/2026

Sovereign yield curves saw little change despite the month’s elevated volatility, as market attention focused on extreme dynamics in commodities and crypto assets, alongside a spike in geopolitical risk stemming from tensions in Iran. In the US, the Fed implemented a widely anticipated pause in its cutting cycle, with Powell surprising markets by explicitly defending central bank independence against government pressure. Meanwhile, Trump nominated Kevin Warsh as a potential successor to Powell; historically a hawk—though recently more amenable to cuts—markets interpreted his nomination as reducing the likelihood of aggressive easing. Highstructural deficits and significant issuance needs continue to hinder yield compression despite more contained inflation data. In Europe, although inflation improved by20 basis points, the ECB held rates steady and yield curves remained virtually flat. Japan continued its curve steepening, with long-end yields now exceeding 3.5%,driving capital repatriation and creating spillover effects on global funding costs. A weak dollar fueled international volatility across other asset classes.

Precious metals,which had held firm for weeks due to safe-haven flows and central bank buying, suffered severe declines at month-end following tighter leverage requirements for derivatives. Geopolitical tensions and bouts of extreme cold drove up crude and gas prices, reviving inflationary fears. Against this backdrop, the portfolio posted amonthly return of 1.18%, driven primarily by local currency emerging market debt and linkers, as well as convertibles and investment grade corporates, while high yield,subordinated debt, and US dollar duration underperformed. The portfolio yield rose to 3.48%, with duration hovering around 5 years.