Monthly Review - February 2026
“You can’t predict. You can prepare.” ~ Howard Marks, investor, writer, and co-founder of Oaktree Capital.
Over the last few days, the ‘Epic Fury’-shock has re-priced tail risk of geopolitics back into energy markets. Iranian retaliation and drone strikes have disrupted regional supply and infrastructure, while traffic through the Strait of Hormuz has reportedly come to a standstill. This has pushed Brent toward $80 and a reminder how quickly a “local” conflict becomes a global macro unknown.
Our base case is not apocalypse. It’s volatility. The Middle East rarely delivers clean outcomes – but merely shifting probabilities. Here are three plausible scenarios:
- Contained escalation (50%)
Tit-for-tat strikes continue, but key infrastructure avoids sustained damage, and Hormuz remains navigable (albeit with higher insurance and freight costs).
Oil: Brent $85–$95 as the risk premium stays embedded.
Gold upside: $5,500–$6,000 as hedging demand persists.
- Cold-war-style energy shock (30%)
A prolonged disruption: repeated strikes, regional uncertainty, temporary shutdowns, or an effective “soft closure” via shipping/insurance withdrawals. History offers parallels: 1973 and 1979 weren’t just oil events; they were inflation regime shifts.
Oil: Brent $100–$140, driven by a genuine supply shock.
Gold upside: $6,000+ as real rates fall and policy credibility is questioned.
- Fast de-escalation (20%)
Backchannel diplomacy stabilises flows; fear fades faster than fundamentals. Think 2019 Abqaiq-style: a violent spike, then an equally swift normalisation once supply proves resilient.
Oil: Brent $70–$80.
Gold: $5, 500 as the safe haven bid cools, but remains persistent.
Our probabilities are early estimates, and no one knows the likely path and how it will impact capital markets. We are moving into an era where geopolitics repeatedly collides with inflation dynamics: energy security, supply chains, sanctions, and fiscal pressures. You don’t “forecast” this reliably; you prepare for it.
That is precisely where our Permanent Portfolio framework earns its keep. In an energy shock, gold and commodity focused managed futures can respond immediately, while cash provides optionality, and government bonds still hedge growth scares when risk assets wobble. This is the type of scenario where diversification is not merely an academic hypothesis, but the difference between enduring the headline cycle and being forced to try and trade it.
To see graphs, download the PDF using the button at the top of this page.
MARKET REVIEW
Deflationary Boom Assets (Equities, Corporate Bonds, EMD)
Global equities edged higher, but the month was defined by dispersion and a sharp style rotation. The Bloomberg World Equity Index returned [+0.98% (USD)], masking a clear split between value [+4.82% (USD)] and growth [-1.04% (USD)]. The air came out of crowded US mega-cap tech: US equities [-1.31% (USD)], Nasdaq [-3.66% (USD)], and the Magnificent 7 [-7.66% (USD)], as investors grew less willing to pay peak multiples amid intensifying scrutiny of AI capex payback.
Outside the US, returns were far stronger: UK [+5.04% (USD)], Europe ex-UK [+2.83% (USD)], Japan [+8.42% (USD)], and EM [+5.22% (USD)]. Credit participated as rates fell: US corporates +1.18% and EMD advanced (Hard +1.18%, Local +1.63%), with spreads largely resilient.
Deflationary Bust Assets (Government Bonds)
Government bonds rallied broadly: US Treasuries [+1.53% (USD)], Global Agg [+0.94% (USD)], UK Gilts [+2.50% (GBP)], as markets balanced softer inflation signals against slowing-growth fears. A cooler US CPI print helped pull yields lower, even as producer-price data highlighted tariff-related cost pressure in the pipeline. In the UK, the BoE held Bank Rate at 3.75% with a close vote, reinforcing a “not yet done” disinflation message.
Inflationary Boom Assets (Managed Futures, CTAs, Commodities excl. Precious Metals)
Commodities were choppy: Brent and WTI were marginally up, whilst natural gas prices declined. Uncertainty in supply-demand dynamics remain highly uncertain and volatile.
Trend-following benefited from cross-asset swings as the SG CTA Index finished up c.+3%, as bond strength, equity weakness, and commodity trends created a more “tradable” tape. The Bitcoin winter gets deeper as the extended its decline, falling [-22.21% (USD)] over the course of February.
Inflationary Bust Assets (Precious Metals & Inflation-Linked Bonds)
Inflation hedges rallied strongly. Gold was up [+7.30% (USD)] to ~$5,251/oz and precious metals gained [+9.88% (USD)], supported by lower real yields, policy uncertainty, and renewed attention to geopolitically driven price dynamics. Inflation-linked bonds also rose: US TIPS [+1.17% (USD)], UK linkers [+3.73% (GBP)], while a weaker GBP TWI [-1.33%] added some fuel for UK-based investors holding USD-denominated real assets.
To see graphs, download the PDF using the button at the top of this page.
CONTACT US
For further information on any of our services, or if you would like to arrange a meeting with an investment manager to see how we can work with you, please get in touch.
LeifBridge Investment Services
Shard Capital Partners
Floor 6, 51 Lime Street
London, EC3M 7DQ
United Kingdom
Telephone: +44(0)20 7186 9900
Email: Info@Leifbridge.com
www.leifbridge.com
Disclaimer:
We try to ensure that the information provided is correct, but we do not give any express or implied warranty as to its accuracy. We do not accept any liability for errors or omissions. The content of this brochure is for guidance purposes only and does not constitute financial or professional advice.
IMPORTANT INFORMATION
LeifBridge is a trading name of Shard Capital Partners LLP. Shard Capital Partners LLP is a limited liability partnership, registered in England with registration number OC360394. Shard Capital Partners LLP Registered office:36-38 Cornhill, London, EC3V 3NG.. Shard Capital Partners LLP is authorised and regulated by the Financial Conduct Authority in the United Kingdom, reference number 538762.
This document is provided for information purposes only and is intend for confidential and sole use by the recipient. It is not to be reproduced, copied or made available to others. The information set out in this document does not constitute investment advice or a personal recommendation. The views expressed in this document are not intended as an offer or a solicitation, to purchase or sell any security or other financial instrument, credit or lending product or to engage in any investment activity.
Past performance is not a guide to future performance. It is important that you understand that with investments, your capital is at risk. The value of investments, as well as the income derived from them, can go down as well as up and investors may get back less than the original amount invested. It is your responsibility to ensure that you make an informed decision about whether to invest with us, based on your particular objectives. If you are still unsure if investing is right for you, please seek independent advice.
The information and opinions expressed within this document are the views of (the company) and are based on information we believe to be reliable, but we do not represent that they are accurate or complete, and they should not be relied upon as such. Any information provided is given in good faith but is subject to change without notice.
No liability is accepted whatsoever by (the company) or its employees and associated companies for any direct or consequential loss arising from this document.
.png)