Macro & Market Views

Confidence Game

Confidence Game

Reflections 2025-2026

Financial market valuations, particularly in the US, continued to richen in 2025 despite a deck full of wildcards. As Head of Global Value Matt McLennan—together with Deputy Heads Julien Albertini and Christian Heck and Senior Research Advisor Kimball Brooker—discuss, however, there’s a fine line between confidence and hubris, and they believe the low risk perception evident in certain markets leaves them particularly vulnerable to the latter. In an environment of fat-tail risks and full valuations, the Global Value team is focused on assets whose scarcity value positions them to participate in the nominal drift of the economy and preserve real purchasing power.

Low Risk Perception Persists amid “Equipoise” in Economy

Given rich equity market valuations (particularly among growth names), tight credit spreads and low implied volatility, the current environment in the US is one of high confidence, in our estimation. While downside risks are plentiful, as we will discuss, this ebullience is not without a foundation in reality. Corporate earnings growth forecasts remain constructive, driven by factors ranging from the impact of the artificial intelligence (AI) "CapEx" cycle to accommodative fiscal conditions. At the same time, short-term interest rates have drifted lower from the start of the year as expectations of easier Federal Reserve policy mounted and ultimately were realized; after being on pause for much of 2025, the central bank cut the federal funds rate by 25 basis points in September, October and December.1

Markets may be further encouraged by conditions John Williams, president of the New York Fed, has described as “equipoise.”2 A cooling labor market and moderating inflation have brought the risks to each into balance, according to Williams, suggesting that significant progress has been made toward a post-pandemic soft landing for the economy. This normalization is encouraging.

Still abnormal and discouraging, however, are the country’s fiscal settings. As shown in Exhibit 1, the federal deficit remains historically outsized relative to the unemployment rate—as it has since the outbreak of Covid-19. Normally, high unemployment rates and recession beget large fiscal deficits, as lower tax revenues combine with increased government spending. Conversely, low unemployment rates and robust economic growth typically support higher tax revenues and tighter fiscal policy, causing deficits to contract or even turn into surpluses. If the economy were truly in equipoise, we’d expect budget deficits of around 2% of GDP—not the 6%-plus we’re at today.

Exhibit 1. Recent Deficits Have Been Historically Wide Relative to Unemployment

 

Source: Haver Analytics, Bureau of Economic Analysis, US Treasury, Federal Reserve Bank of St. Louis; data as of November 30, 2025.

 

We believe this persistent deficit spending helps explain the decoupling of gold and Treasuries seen in recent years, as shown in Exhibit 2. Gold prices appear to be acknowledging the double-bind facing US policymakers: Do nothing to address the deficit and increase the risk of inflation, or take action to curb deficit spending and increase the risk of recession. More recent rallies in the prices of other precious metals like silver and platinum appear to reflect the same policy conundrum.3

Exhibit 2. The Performance of Gold and Treasuries Has Decoupled

Index: January 2015 = 100

 

Note: Long-dated Treasuries are represented by iShares 20+ Year Treasury Bond ETF.
Source: Bloomberg; data as of November 30, 2025.

 

Persistent deficit spending has also imparted some positive nominal drift to the economy, which has trickled down into corporate earnings and margins and by extension forestalled potential recession amid the 2022–23 Fed tightening cycle. Consensus earnings expectations—which likely reflect current fiscal settings—forecast growth to continue through at least calendar 2026, potentially offering support for equity markets. Continued earnings growth may also support increased demand for labor at the same time a burgeoning supply shock unfolds, driven by demographic trends and immigration policy, which could reintroduce wage inflation that threatens the equipoise narrative.

The natural increase in the US population—that is, the difference between births and deaths—has been in decline for much of the twenty-first century as Baby Boomers age and Americans have fewer children.4 Though this has been more than offset by net immigration, this source of labor figures to shrink dramatically should the Trump administration maintain its aggressive immigration policy.5 Indeed, the Congressional Budget Office expects net immigration to grow 0.1% this year, down from 0.8% in 2024.6

Meanwhile, the One Big Beautiful Bill, enacted in July, extended or made permanent many of the tax provisions slated to expire at year-end 2025, leaving fiscal settings at excessively accommodative levels. With tax receipts biased lower and bipartisan consensus on entitlement reform remaining elusive, Trump has looked to tariffs—which are effectively a backdoor consumption tax—as an alternative source of federal revenue. Even at levels rivaling those seen in the 1930s, however, the current effective tariff rate will likely have little impact on fiscal dynamics. As shown in Exhibit 3, tariff revenue in 2025 is estimated to reduce the deficit slightly before widening resumes in 2026 and beyond driven by increased spending on healthcare, Social Security and defense, and higher interest expenses. Were the Supreme Court to strike down Trump’s ability to impose tariffs under the International Emergency Economic Powers Act, as it is currently considering, revenue generated by the levies will likely fall; however, it’s quite possible the Trump administration would seek other legal justifications to reimpose any cancelled tariffs.

 

Tariffs are effectively a backdoor consumption tax and an alternative source of federal revenue.

Exhibit 3. At Current Levels, Tariffs Will Have Little Impact on the Deficit

Federal Fiscal Balance as a % of GDP

 

Source: Haver Analytics, Congressional Budget Office, Office of Management and Budget, Piper Sandler, Yale Budget Lab; data as of September 30, 2025. First Eagle Investments forecasts for 2025 and beyond.

 

Everyone Choose Sides

As the US sinks deeper into its fiscal quagmire, we’ve seen the geopolitical bifurcation of the world continue apace. We’re reminded of a quote from geostrategist Halford Mackinder in 1904: “Whoever controls the Eurasian Heartland controls the world.” While the US’s role on the global stage has become harder to define, bonds connecting the authoritarian powers concentrated in eastern Europe and Asia—China, Russia, Iran and North Korea—have strengthened; a September military parade in Beijing attended by the leaders of Russia and North Korea is just one example of the burgeoning affection among this cohort.

Beyond ideology, this shift is being expressed in monetary behaviors. Since the West froze Russia’s official foreign reserves following its 2022 invasion of Ukraine, a range of countries—driven by concerns about the potential weaponization of their reserve assets—have diversified their holdings, primarily by increasing their allocations to gold. Gold purchases by global central banks have exceeded 1,000 tonnes in each of the past three full years after reaching only 450 tonnes in 2021, and purchases are on track for the high triple digits in 2025.7 As a result, gold holdings as a share of foreign reserves now exceed Treasuries for the first time in 30 years.8 Steady central bank buying also has helped support the price of gold, which— unusually—has rallied alongside equities, more than doubling in price since the beginning of 2024.9

 

Gold holdings as a share of foreign reserves now exceed Treasuries for the first time in 30 years.

Non-US Equity Valuations Appear Modest Compared to the US

Financial markets, for their part, seem unfazed by these fat-tailed fiscal and geopolitical risks. This is especially true in the US, where any number of indicators suggest low risk perception, including volatility metrics, the ratio of the S&P 500 to consumer price index-adjusted trailing peak earnings, and the relative valuations of US growth and value stocks. 
 
Despite the strong performance of non-US equities thus far in 2025—the MSCI World ex USA Index has gained 25.8% through November-end compared to 17.8% for the S&P 500—the price ratio of US stocks to non-US names is well more than double the long-term average, as shown in Exhibit 4, suggesting that some degree of latency remains in non-US markets. The US equity market is trading at around 25x earnings, which is equivalent to a 4% earnings yield, while non-US markets are at 16x earnings, or about a 6% yield.10 Unless US productivity growth can account for that 2% spread, global diversification appears compensatory on valuation alone.

 

Financial markets, especially in the US, seem unfazed by these fat-tailed fiscal and geopolitical risks.

Exhibit 4. US Equity Valuations Remain Stretched Compared to World

Price Ratio of S&P 500 Index to MSCI World ex-USA Index

 

Source: Bloomberg; data as of November 30, 2025.

 

Meanwhile, there are signs animal spirits are reawakening in a range of non-US markets, both developed and emerging, adding meat to the relative valuation bone. In Europe, for example, Germany has taken steps to leverage its ample fiscal capacity, notably on defense and infrastructure projects,11 and NATO countries as a whole agreed to raise annual defense spending to 5% of GDP by 2035.12 China’s ongoing debt-restructuring initiative for local governments—earmarked at 12 trillion yuan—appears to be bearing fruit, reducing local government’s debt service payments and their shakedown of local businesses.13 In Japan, the country’s new— and first female—prime minister has a reputation as a pro-spending conservative who also favors stimulative monetary policy.14

Dollar weakness has been another tailwind for non-US equity markets during 2025, as the ICE US Dollar Index has shed more than 8% year to date.15 Historically, US equities have tended to outperform non-US names during periods of dollar strength, while the opposite has been true when the dollar was weak. While we won’t hazard a guess on the dollar’s behavior going forward, we would note that currency regime shifts historically have been durable. Given that the period of dollar strength from which we just emerged began in 2011, we’re open to the possibility that 2025 represented only the beginning of a weak-dollar phase.

Investing with Purpose

We in the Global Value team are great believers that investing done well is investing done with purpose. Our particular sense of purpose has long been focused on resilient wealth creation—the notion that capital can be deployed in such a way that it keeps pace with the nominal drift of the economy over time and thus retains its purchasing power. Further, we believe an emphasis on downside mitigation can encourage clients to remain invested during challenging markets and support the long-term compounding of their assets.

 

Our focus on resilient wealth creation aims to keep pace with nominal drift and retain purchasing power.

Perhaps counterintuitively to some, we believe the most effective way to fulfill our purpose—far better than “safe” short-term government securities—is through thoughtful allocations to risk assets.

Our perspective hinges on differentiating between what we describe as “fixed principal” assets and “fixed positional” assets. Treasury bills, for example, are fixed principal assets; the yield paid to investors is fixed, as is the nominal value of the bill at maturity. Considered risk-free due to its explicit US government backing, every T-bill held to maturity has paid its investors exactly what was promised, no more and no less. While such stability has its merits, it also has its drawbacks; as the supply of these assets varies over time with the funding needs of the government, their real, inflation-adjusted value at maturity is unknowable.

In contrast, gold and equities are examples of fixed positional assets; while their yield is variable or nonexistent and their terminal value is unknown, their relatively fixed supply historically has enabled them to participate in the nominal drift of the economy. As nominal prices have increased alongside the expanding money supply and growing government debt, gold and equity prices have kept pace. 
 
Exhibit 5 serves as a good example of how this dynamic has played out over time. The cumulative return of short-term Treasuries has climbed steadily throughout the measurement period with little price volatility, which should not come as a surprise for an asset with a fixed coupon, fixed principal and theoretically zero risk of default. But this return significantly lags the supply growth of Treasuries, as represented by the stock of public debt. Which is to say that the real value of these Treasury returns has eroded over the long term as more and more debt was issued. In contrast, a fixed-positional asset like gold, while volatile in nominal terms, has kept pace with the growth of government debt outstanding, delivering a far stronger real return compared with Treasuries.

 

The relatively fixed supply of assets like gold and equities historically has enabled them to participate in the nominal drift of the economy.

Exhibit 5. Gold Has Kept Pace with Nominal Drift over Time

Index: 1968 = 100

 

Note: The Treasury bill return is based on constant maturity yields from the US Treasury, assuming that the holding is rolled every trading day into a new instrument of like maturity.
Source: Haver Analytics, Bloomberg, Federal Reserve; data as of November 30, 2025.

 

A similar trajectory could be seen in the price of equities, even as the relative value of gold and equities has fluctuated over time. Gold generally has been worth more than equities during periods of low confidence in markets and the economy, such as the Great Depression, stagflation in the 1970s and the global financial crisis. Equities have led during periods of confidence, such as the Roaring Twenties, the post-war boom years of the 1950s and ‘60s, and the 1990s internet boom. As the confidence pendulum has swung back and forth over time, a portfolio that included exposure to both gold and equities would have been more stable than owning either in isolation, as shown in Exhibit 6.

Exhibit 6. Gold and Equities Together Have Provided a Smoother Ride than Either Alone

Gold Spot Price and S&P 500 Index, Logarithmic Scale

 

Note: Data are annual prior to 1968 and are monthly thereafter.
Source: Bloomberg, Federal Reserve, Haver Analytics; data as of November 30, 2025.

 

 

Good Things Take Time

In our view, there is probably no commodity scarcer in supply—or more valuable—than patience. While markets, generally speaking, are obsessed with near-term results, we target businesses that leverage their advantages deliberately over time periods measured in decades, not years.1

Grupo Mexico is a holding company with mining, transportation and infrastructure operations. Primarily through its listed subsidiary Southern Copper, Grupo Mexico’s mining business comprises more than 80% of earnings.2 With the largest reserves of any copper producer and mines well positioned on the cost curve, Grupo Mexico controls long-duration assets that are nearly impossible to replicate. Despite its high-quality characteristics, Grupo Mexico—like many holding companies—trades at a discount to the sum of its parts; Grupo Mexico’s stake in publicly traded Southern Copper alone exceeds its own market cap by more than $30 billion.3 Bolstered by an attractive dividend, Grupo Mexico has delivered compelling, long-term total returns despite the holding-company discount. Its family-led management team has long demonstrated sound capital allocation and a long-term orientation, and we believe the stock will continue to be a beneficiary of the constructive long-term outlook for copper.

Taiwan Semiconductor Manufacturing Corporation (TSMC) is another company we believe is positioned for long-term success in a structurally appealing industry. TSMC is by far the world’s largest semiconductor foundry and is the primary manufacturer of the next-gen chips used in generative AI by customers like Apple, Nvidia and Intel. The company maintains a 60%-plus share of a market that is projected to experience continued strong growth.4 TSMC’s scale helps it to continually reinforce its advantaged market position, generating significant revenues that the company reinvests into research and design and CapEx. Strong cash flows have enabled TSMC to maintain attractive dividend levels over time, resulting in attractive total returns for a stock we first purchased in 2018.

Healthcare has been out of favor in recent years, weighed down by post-Covid-19 headwinds, but we find the highly regulated sector to be structurally attractive given growing demand and significant barriers to entry. With a market cap around $6.5 billion, Bio-Rad Laboratories is smaller than our typical investment, but the company dominates the niches it serves within the areas of life-science research and diagnostics. Vertical integration historically has resulted in strong recurring revenue for the company, and its diversified customer base has further supported stability. Notably, Bio-Rad maintains a one-third stake in German biopharma company Sartorius that has grown significantly since its purchase and provides Bio-Rad with an economic exposure beyond its core businesses. Founded in a Quonset hut in 1952 by a husband-wife pair of Cal Berkely graduates and run by their son since 2003, Bio-Rad maintains a family orientation that aligns interests with shareholders and contributes to the long-term orientation we look for in management teams.

 

1. Specific investments described herein do not represent all investment decisions made by the Global Value team. The reader should not assume that investment decisions identified and discussed were or will be profitable. Specific investment advice references provided herein are for illustrative purposes only and are not necessarily representative of investments that will be made in the future.
2. Source: Company reports; data as of October 28, 2025.
3. Source: Bloomberg; data as of November 30, 2025.
4. Source: Counterpoint Research; data as of September 30, 2025.

Catching the Drift

Strong markets can create a dilemma for portfolio managers; while we want to let our roses bloom, we also must remain true to our investment discipline. Viewing the Global Value team’s portfolios from the bottom up, we have looked for opportunities to recycle capital across 2025, paring back more successful positions to take advantage of other opportunities in sectors or geographies that have been out of favor and appear to offer more attractive long-term value.

Despite the confidence on display in the markets for the better part of two years, significant fat-tail risks persist, including massive sovereign debt loads and shifting geopolitical alliances. While an increase in the market’s perception of these risks would likely weigh on both US and non-US stocks, relative valuations suggest non-US markets may have a greater cushion should that occur.

Across markets, we remain purposeful in our approach, following a path to resilient wealth creation by allocating capital in a manner that can keep pace with the nominal drift of the economy over time while also providing downside mitigation during broadly challenging periods. We believe this effort hinges on identifying assets with scarcity value—whether in a potential hedge like gold, in the ballast of low-beta sectors like consumer staples and healthcare, or in high-quality equities with some kind of advantaged position in their market—and acquiring them only when available at a “margin of safety.”16

1. Source: CME FedWatch; data as of November 30, 2025.
2. Source: Federal Reserve Bank of New York; data as of February 11, 2025.
3. Source: Bloomberg; data as of November 30, 2025.
4. Source: US Census Bureau; data as of December 19, 2024.
5. Wendy Edelberg, Stab Veuger and Tara Wilson, “Immigration Policy and Its Macroeconomic Effects in the Second Trump Administration,” American Enterprise Institute (July 2025).
6. Source: Congressional Budget Office; data as of September 10, 2025.
7. Source: World Gold Council; data as of October 30, 2025.
8. Source: Reuters; data as of August 27, 2025.
9. Source: Bloomberg; data as of November 30, 2025.
10. Source: Bloomberg; data as of November 30, 2025.
11. Source: Reuters; data as of March 21, 2025.
12. Source: NATO; data as of June 27, 2025.
13. Source: Bloomberg; data as of April 16, 2025.
14. Source: Bloomberg; data as of October 4, 2025.
15. Source: Bloomberg; data as of November 30, 2025.
16. First Eagle defines “margin of safety” as the difference between a company’s market price and our estimate of its intrinsic value. “Intrinsic value” is based on our judgment of what a prudent and rational business buyer would pay in cash for all of a company in normal markets.

The opinions expressed are not necessarily those of the firm. These materials are provided for informational purposes only. These opinions are not intended to be a forecast of future events, a guarantee of future results or investment advice. Any statistics contained herein have been obtained from sources believed to be reliable, but the accuracy of this information cannot be guaranteed. The views expressed herein may change at any time subsequent to the date of issue hereof. The information provided is not to be construed as a recommendation or an offer to buy or sell or the solicitation of an offer to buy or sell any fund or security.

The statements contained herein may include prospects, statements of future expectations and other forward-looking statements that are based on management’s current views and assumptions and involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such forward-looking statements. Any forward-looking statements herein are made only as of the date of this material, and the company assumes no obligation to update any information or forward-looking statement contained herein, except as required to be disclosed by law.

Past performance is not indicative of future results.

Risk Disclosures 

All investments involve the risk of loss of principal.

A principal risk of investing in value stocks is that the price of the security may not approach its anticipated value or may decline in value. “Value” investments, as a category, or entire industries or sectors associated with such investments, may lose favor with investors as compared to those that are more “growth” oriented.

There are risks associated with investing in securities of foreign countries, such as erratic market conditions, economic and political instability and fluctuations in currency exchange rates.

Investment in gold and gold-related investments present certain risks, including political and economic risks affecting the price of gold and other precious metals like changes in US or foreign tax, currency or mining laws, increased environmental costs, international monetary and political policies, economic conditions within an individual country, trade imbalances and trade or currency restrictions between countries. The price of gold, in turn, is likely to affect the market prices of securities of companies mining or processing gold and, accordingly, the value of investments in such securities may also be affected. Gold-related investments as a group have not performed as well as the stock market in general during periods when the US dollar is strong, inflation is low and general economic conditions are stable. In addition, returns on gold related investments have traditionally been more volatile than investments in broader equity or debt markets. Investment in gold and gold related investments may be speculative and may be subject to greater price volatility than investments in other assets and types of companies.

Municipal bonds are subject to credit risk, interest rate risk, liquidity risk and call risk. However, the obligations of some municipal issuers may not be enforceable through the exercise of traditional creditors’ rights. The reorganization under federal bankruptcy laws of a municipal bond issuer may result in the bonds being cancelled without payment or repaid only in part, or in delays in collecting principal and interest.

The information is not intended to provide and should not be relied on for accounting or tax advice. Any tax information presented is not intended to constitute an analysis of all tax considerations.

The value and liquidity of portfolio holdings may fluctuate in response to events specific to the companies or markets, as well as economic, political or social events in the US or abroad. During periods of market volatility, the value of individual securities and other investments at times may decline significantly and rapidly. The securities of small and micro-size companies can be more volatile in price than those of larger companies and may be more difficult or expensive to trade.

Specific investments described herein do not represent all investment decisions made by First Eagle. The reader should not assume that investment decisions identified and discussed were or will be profitable. Specific investment advice references provided herein are for illustrative purposes only and are not necessarily representative of investments that will be made in the future.

Diversification does not guarantee investment returns and does not eliminate the risk of loss.

Alternative investments can be speculative and are not suitable for all investors. Investing in alternative investments is only intended for experienced and sophisticated investors who are willing and able to bear the high economic risks associated with such an investment. Investors should carefully review and consider potential risks before investing. Certain of these risks include: 

• Loss of all or a substantial portion of the investment; 
• Lack of liquidity in that there may be no secondary market or interest in the strategy and none is expected to develop; 
• Volatility of returns;
• Interest rate risk;
• Restrictions on transferring interests in a private investment strategy; 
• Potential lack of diversification and resulting higher risk due to concentration within one or more sectors, industries, countries or regions; 
• Absence of information regarding valuations and pricing; 
• Complex tax structures and delays in tax reporting; 
• Less regulation and higher fees than mutual funds; 
• Use of leverage, which magnifies the potential for gain or loss on amounts invested and is generally considered a speculative investment technique and increases the risks associated with investing in the strategy; 
• Carried interest, which may cause the strategy to make more speculative, higher risk investments than would be the case in absence of such arrangements; and 
• Below-investment-grade loans, which may default and adversely affect returns. 

10-year Treasury note is a debt obligation of the US government with a maturity of 10 years upon issuance.

AMT bonds are municipal securities whose interest income is subject to federal taxation if the alternative minimum tax applies to the investor.

Asset-backed securities (ABSs) are debt securities whose payments of principal and interest are backed by the cash flow generated by pools of income-producing credit assets.

Asset-based lending (ABL) is corporate borrowing supported by specific assets of the borrower rather than its cash flows.

Beta is a measure of an investment's price volatility relative to that of the overall market.

Business development companies (BDCs) are investment vehicles that provide capital primarily to middle market businesses.

Collateralized loan obligations (CLOs) are financial instruments collateralized by a pool of corporate loans.

Collective investment trusts (CITs) are bank-administered trusts that hold commingled assets.

Convexity measures the sensitivity of a bond’s duration to changes in its yield.

Credit derivatives are financial contracts that transfer credit risk from one party to another in exchange for a fee.

A credit rating is an assessment provided by a nationally recognized statistical rating organization (NRSRO) of credit worthiness of an issuer with respect to debt obligations, including specific securities, money market instruments, or other bonds. Ratings are measured on a scale that generally ranges from AAA (highest) to D (lowest); ratings are subject to change without notice. Not Rated (NR) indicates that the debtor was not rated and should not be interpreted as indicating low quality.

Dry powder refers cash reserves kept on hand by a company or investment fund in anticipation of attractive investment opportunities.

Duration measures the sensitivity of a bond price to changes in its yield.

Exchange-traded funds (ETFs) are listed investment vehicles that seek to provide exposure to a benchmark, index or actively managed strategy.

Federal funds rate is the interest rate at which depository institutions (banks and credit unions) lend reserve balances to other depository institutions overnight on an uncollateralized basis.

General obligation (GO) bonds are municipal securities whose payments are backed by the full faith and credit of the issuer and by extension its ability to tax its residents.

Gross domestic product (GDP) measures the total value of all economic output in goods and services for an economy.

Interval funds are pooled investment vehicle that offer investors periodic liquidity at a designated interval.

Magnificent Seven is widely used in the financial media and elsewhere to refer to seven very large US technology-related stocks—Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla.

Moody's Investors Service is a nationally recognized statistical rating organization (NRSRO) that assesses the creditworthiness of an issuer with respect to debt obligations, including specific securities, money market instruments or other bonds. Ratings are measured on a scale that generally ranges from Aaa (highest) to RD (lowest); ratings are subject to change without notice.

Mortgage-backed securities (MBSs) are debt securities whose payments of principal and interest are backed by the cash flow generated by pools of mortgage loans.

Payment-in-kind (PIK) is a financing feature in which the borrower/issuer is allowed to roll accrued interest into the loan/bond principal rather than paying cash.

Private placements are non-public offerings of securities sold directly to investors.

Residential mortgage-backed securities (RMBSs) are debt securities whose payments of principal and interest are backed by the cash flow generated by pools of residential mortgage loans.

Revenue bonds are municipal securities backed by revenues from a specific project or source, such as highway tolls or lease fees.

Separately managed accounts (SMAs) are investment accounts owned by a single investor and managed by a professional investment firm.

Sovereign debt is issued by a country's government as a way to borrow capital.

Structured credit is a financial instrument that pools together groups of similar, income-generating assets.

Tax-exempt bonds are municipal securities whose interest is exempt from federal—and sometime state and local—tax for its investors.

US Treasury securities are debt instruments backed by the full faith and credit of the US government.

A yield curve is a graphical representation of interest rates on debt of equal credit quality across a range of maturities.

Yield to worst is a measure of the lowest possible yield that can be received on a bond that operates within the terms of its contract without defaulting.

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Bloomberg US Municipal Bond Index (Gross/Total) measures the performance of the US municipal tax-exempt investment grade bond market. A total-return index tracks price changes and reinvestment of distribution income.

Consumer price index (CPI) (Price) measures inflation as experienced by consumers in their day-to-day living expenses by capturing the average change over time in the prices paid for a representative basket of consumer goods and services. A price-return index only measures price changes.

ICE US Dollar Index is a geometrically averaged calculation of six currencies weighted against the US dollar maintained by ICE Futures US.

iShares 20+ Year Treasury Bond ETF seeks to track the investment results of an index composed of US Treasury bonds with remaining maturities of more than 20 years.

MSCI EAFE Index (Net) measures the performance of large and midcap equities across developed markets countries around the world excluding the US and Canada. A net-return index tracks price changes and reinvestment of distribution income net of withholding taxes.

MSCI World ex USA Index (Net) measures the performance of large and midcap equities across developed markets and emerging markets excluding the US and covers approximately 85% of the free float-adjusted capitalization in each country. A net-return index tracks price changes and reinvestment of distribution income net of withholding taxes.

Russell 2000® Index (Gross/Total) measures the performance of the small cap segment of the US equity universe. It includes approximately 2,000 of the smallest securities based on a combination of their market cap and current index membership. A total-return index tracks price changes and reinvestment of distribution income.

Russell 3000® Index (Gross/Total) measures the performance of the 3000 largest US companies based on market capitalization and is designed to represent approximately 98% of the investable US equity market. A total-return index tracks price changes and reinvestment of distribution income.

S&P 500 Index (Gross/Total) measures the performance of 500 of the top companies in the leading industries of the US economy and is widely recognized as a proxy for the US market as a whole. A total-return index tracks price changes and reinvestment of distribution income.

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Residents of Australia: This communication is exclusively directed and intended for wholesale clients (as such term is defined in Australian Corporations Act 2001 (Cth) only and, by receiving it, each prospective investor is deemed to represent and warrant that it is a wholesale client. The information contained herein is provided for informational purposes only and should not be considered a solicitation or offering of investment services, nor a solicitation to sell or buy any shares of any securities (nor shall any such securities be offered or sold to any person) in any jurisdiction where such solicitation or offering would be unlawful under the applicable laws of such jurisdiction. Unless otherwise indicated, no regulator or government authority has reviewed this material or the merits of the products and services referenced herein. This material and the information contained herein has been made available in accordance with the restrictions and/ or limitations implemented by any applicable laws and regulations. This material is provided on a confidential basis for informational purposes only and may not be reproduced in any form. Before acting on any information in this material, prospective investors should inform themselves of and observe all applicable laws, rules and regulations of any relevant jurisdictions and obtain independent advice if required. This material should not be relied upon as investment advice and is not a recommendation to adopt any investment strategy. This material is for the use of the named addressee only and should not be given, forwarded or shown to any other person (other than employees, agents or consultants in connection with the addressee’s consideration thereof). First Eagle Investment Management, LLC is exempt from the requirement to hold an Australian financial services licence under the Corporations Act 2001 (Cth) in respect of the financial services it provides to wholesale clients in Australia and is regulated by the US Securities and Exchange Commission under US laws, which differ from Australian laws.

Residents of Brazil: First Eagle Investment Management, LLC is not accredited with the Brazilian Securities Commission - CVM to perform investment management services. The investment management services may not be publicly offered or sold to the public in Brazil. Documents relating to the investment management services as well as the information contained therein may not be supplied to the public in Brazil.

Residents of Canada: This material does not constitute investment advice or an offer or solicitation to sell or a solicitation of an offer to buy any product or service or any securities (nor shall any product or service or any securities be offered or sold to any person until such time as such offer and sale is permitted under applicable securities laws.) Any products or services or any securities referenced in this material may not be licensed in all jurisdictions, and unless otherwise indicated, no securities commission or similar authority in Canada has reviewed this material or the merits of the products and services referenced herein. If you receive a copy of this material, you should note that there may be restrictions or limitations to whom these materials may be made available. This material is private and confidential and is directed at and intended for institutional investors and is only being provided to “permitted clients” as defined under the Canadian Securities Administrators’ National Instrument 31-103 – Registration Requirements, Exemptions and Ongoing Registrant Obligations. This material is for informational purposes only. This material does not constitute investment advice and should not be relied upon as such. Before acting on any information in this material, prospective clients should inform themselves of and observe all applicable laws and regulations of Canada. Prospective clients should inform themselves as to the legal requirements and tax consequences within the countries of their citizenship, residence, domicile and place of business with respect to the acquisition, holding or disposal of shares or the ongoing provision of services, and any foreign exchange restrictions that may be relevant thereto. First Eagle Investment Management, LLC is not authorized to provide investment advice and/or management money in Canada.

Residents of Dubai: This material is intended for distribution only to Professional Clients. It must not be delivered to, or relied on by, any other person. The Dubai Financial Services Authority has no responsibility for reviewing or verifying any documents in connection with any funds, products or services that may be mentioned herein. The Dubai Financial Services Authority has not approved this material nor taken steps to verify the information set out in it and has no responsibility for it. If you do not understand the contents of this material, you should consult an authorized financial adviser.

Residents of the State of Qatar: Any funds, products or services referenced in this material may not be licensed in all jurisdictions, including the State of Qatar (“Qatar”), and unless otherwise indicated, no regulator or government authority, including the Qatar Financial Markets Authority (QFMA), has reviewed this material or the merits of the products and services referenced herein. If you receive a copy of this material, you may not treat this as constituting an offer, and you should note that there may be restrictions or limitations as to whom these materials may be made available. This material is directed at and intended for a limited number of “qualified” investors (as such term is defined under the laws of Qatar). This material is provided on a confidential basis for informational purposes only and may not be reproduced in any form. Before acting on any information in this material, prospective clients should inform themselves of and observe all applicable laws and regulations of any relevant jurisdictions, including any laws of Qatar. This material is for the use of the named addressee only and should not be given, forwarded or shown to any other person (other than employees, agents or consultants in connection with the addressee’s consideration thereof). Any entity responsible for forwarding this material to other parties takes responsibility for ensuring compliance with applicable securities laws.

Residents of Taiwan: First Eagle Investment Management, LLC is not licensed to engage in an investment management or investment advisory business in Taiwan and the services described herein are not permitted to be provided in Taiwan. However, such services may be provided outside Taiwan to Taiwan resident clients.

Residents of United Arab Emirates (Abu Dhabi): The offering of the products and/or services described herein have not been approved or licensed by the UAE Central Bank, the UAE Securities and Commodities Authority (SCA), the Dubai Financial Services Authority (DFSA) or any other relevant licensing authorities in the UAE, and accordingly does not constitute a public offer in the UAE in accordance with the commercial companies law, Federal Law No. 2 of 2015 (as amended), SCA Board of Directors’ Decision No. (13/Chairman) of 2021 on the Regulations Manual of the Financial Activities and Status Regularization Mechanisms or otherwise. Accordingly, this material is not offered to the public in the UAE (including the Dubai International Financial Centre (DIFC)). This material is strictly private and confidential and is being issued to a limited number of institutional and individual clients: a) who meet the criteria of a Professional Investor as defined in SCA Board of Directors’ Decision No. (13/Chairman) of 2021 on the Regulations Manual of the Financial Activities and Status Regularization Mechanisms or who otherwise qualify as sophisticated clients; b) upon their request and confirmation that they understand that the products and/or services described in this material have not been approved or licensed by or registered with the UAE Central Bank, the SCA, DFSA or any other relevant licensing authorities or governmental agencies in the UAE; and c) must not be provided to any person other than the original recipient and may not be reproduced or used for any other purpose.

Residents of United Kingdom: This material is issued by First Eagle Investment Management, LLC and is lawfully distributed in the United Kingdom by First Eagle Investment Management, Ltd. First Eagle Investment Management, Ltd is authorised and regulated by the Financial Conduct Authority (FRN: 798029) in the United Kingdom. This material is directed only at persons in the United Kingdom who qualify as “professional investors.” This material is not directed at any persons in the United Kingdom who would qualify as “retail investors” within the meaning of the UK Alternative Investment Fund Managers Regulations 2013 (S.I. 2013/1773) or the EU Packaged Retail and Insurance-based Investment Products Regulation (No 1286/2014), the UK PRIIPs Regulation, and such persons may not act or rely on the information in this material.

FEF Distributors, LLC (“FEFD”) (SIPC), a limited purpose broker-dealer, distributes certain First Eagle products. FEFD does not provide services to any investor but rather provides services to its First Eagle affiliates. As such, when FEFD presents a fund, strategy or other product to a prospective investor, FEFD and its representatives do not determine whether an investment in the fund, strategy or other product is in the best interests of, or is otherwise beneficial or suitable for, the investor. No statement by FEFD should be construed as a recommendation. Investors should exercise their own judgment and/or consult with a financial professional to determine whether it is advisable for the investor to invest in any First Eagle fund, strategy or product.

First Eagle Investments is the brand name for First Eagle Investment Management, LLC and its subsidiary investment advisers. Napier Park is the brand name of a subsidiary investment adviser engaged in the alternative credit business.

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