US equities moved lower this week, led by weakness in technology stocks as both sector-specific and macroeconomic pressures converged.  

Financial data and analytics stocks underperformed following announcements from Anthropic around its latest Claude AI model, which it claims can perform increasingly complex financial research tasks. While still early-stage, the announcement has raised questions around long-term pricing power and competitive dynamics for certain data-driven software businesses. 

AI infrastructure leaders pushed back on disruption fears, with CEOs from Nvidia and Arm dismissing concerns that advanced AI systems will destroy software companies. Their view remains that AI will expand total demand across hardware, software and services rather than simply replacing existing revenue streams. 

Broader risk sentiment deteriorated as macro data added pressure. US JOLTS jobs openings printed at their lowest level since September 2020, signalling a cooling labour market, while Challenger layoff announcements surged to their highest level since 2009. Together, these indicators reinforced concerns that economic momentum may be slowing faster than expected. 

Commentary from Industry Leaders

This week I attended the PIMCO 2026 Market Outlook Lunch, joined by Tiffany Wilding (Economist), Adam Bowe (Head of Australia Portfolio Management) and Kris Kraus (Portfolio Manager). The discussion provided a valuable perspective on global macro conditions, Australia's outlook and positioning within private markets. 

Key Points: 

• Macroeconomic Outlook: Global growth has proven more resilient than expected despite ongoing tariff pressures and policy uncertainty. A key offset has been sustained investment in artificial intelligence, which continues to support activity across multiple sectors. With starting yields still elevated and meaningful divergence across global economies and policy settings, PIMCO sees a broad and attractive opportunity set for active fixed income to deliver robust outcomes for investors for 2026. 

• Australia: Australian economic growth has improved, supported by household consumption. However, the outlook remains highly sensitive to interest rates, making the trajectory of monetary policy and household income resilience critical factors to monitor over the next 12-24 months. 

• Private Markets: Within private credit, the focus remains on asset-based lending and high quality borrowers. More caution is warranted in parts of the leveraged corporate market, particularly segments exposed to policy shifts and structural disruption from AI, where downside risks are increasing. 

Portfolio Perspective: The discussion reinforced the importance of selectivity across both public and private markets. High starting yields, disciplined underwriting and an active approach to risk management remain key pillars for navigating a more fragmented and volatile global environment. 

Economic News 

The Reserve Bank of Australia delivered its first interest rate increase of the year on 3 February 2026, raising the official cash rate by 25 basis points to 3.85% after holding rates unchanged late last year. This marks the first hike since November 2023 as inflation pressures have re-emerged stronger than expected. 

 Key Points: 

• RBA Commentary: The RBA highlighted that inflation has remained above the central banks 2-3% target band and that capacity pressures and labour market conditions are tighter than previously assumed. Factors that persuaded the Board to tighten policy rather than extend the recent cutting cycle. Forecasts released alongside the decision suggest inflation may stay elevated through 2026, keeping the door open for further tightening later in the year if price pressures don't ease. 

Markets and major banks have already begun pricing through the move, with Australia's big lenders notifying borrowers of corresponding home loan rate increases and some savers benefitting from higher deposit rates as banks adjust to the new cash rate backdrop.

Market Snapshot 

• Australia: ASX down today with miners and tech stocks hit the hardest. 

• United States: Dow -1.2%, S&P 500 -1.2%, Nasdaq -1.6%. 

• Bonds: US 10-year yield at 4.18% and Australian 10-year yield at 4.80%.  

• Gold: Declined overnight.

Key Events Coming Up

• Wednesday 11th, February: US Nonfarm Payroll Jan

• Wednesday 11th, February: US Unemployment Rate 

Investment Update

One of the private credit strategies currently available through our investment offering continues to deliver stable, income-focused performance, consistent with its role as defensive allocation within portfolios. 

Over the past 12 months, the strategy has generated strong net income returns, with performance for the most recent month remaining positive and in line with expectations. Returns are driven primarily by contractual interest income, rather than market revaluations, supporting a high degree of predictability and capital stability. 

The portfolio is positioned conservatively, with exposure to senior secured, first-mortgage commercial real estate loans and an average loan-to-value ratio in the low 60% range, providing a meaningful buffer against asset price volatility. Importantly, there are currently no loans in arrears, no related-party lending and ongoing independent valuation oversight - all reinforcing the focus on capital preservation and risk management. 

Activity over the month included selective new lending, alongside loan repayments, maintaining portfolio diversification and a relatively short weighted loan duration. This allows the strategy to remain adaptive in the current interest rate environment, where demand for private credit remains strong and traditional bank lending conditions remains constrained. 

Why this matters for portfolios: 

 With cash rates elevated and market volatility persisting, well-structured private credit can play an important role in portfolios by providing:

• Regular income 

• Asset-backed downside protection

• Low correlation to equity markets

This strategy is available to wholesale investors through our platform. If you would like more information, including suitability, structure and how it may fit within your portfolio, please feel free to get in touch and we can discuss access in more detail.