Quarterly Commentary Q1 2026
The first quarter of 2026 brought heightened market volatility, driven largely by geopolitical tensions and rising energy prices. Inflation increased to 3.3% annualized in March, and while this has weighed on consumer sentiment, the broader economic outlook remains stable with a recession still considered unlikely. Expectations for interest rate cuts have shifted, with markets now anticipating fewer and potentially later moves from the Federal Reserve as inflation trends evolve.
Despite near-term uncertainty, key drivers of growth remain intact, including continued investment in artificial intelligence and supportive consumer spending, despite low consumer confidence. Market concentration in a handful of large companies reinforces the importance of diversification, including exposure to international markets where valuations may be more attractive. As always, staying disciplined, diversified, and focused on long-term goals remains the most effective way to navigate short-term market fluctuations.
Economy & Markets Commentary
The escalation of conflict in the Middle East triggered a sharp rise in global energy prices, driven by disruptions in the Strait of Hormuz, a critical route for oil and fertilizer trade. Oil prices surged above $110 per barrel, adding to inflation pressures worldwide and complicating economic conditions. In the U.S., growth slowed while inflation remained elevated, with higher input costs and uneven labor market trends. Although investment in AI and digital infrastructure continued to support capital spending, broader economic activity weakened, and the Federal Reserve held rates steady amid heightened uncertainty and persistent inflation concerns.
Globally, the energy shock strained both developed and emerging economies, raising inflation and dampening growth expectations. Equity markets declined overall, with U.S. stocks underperforming as investors rotated toward Energy and Value sectors, while fixed income returns were muted amid rising yields. Commodities and energy-related assets stood out with strong gains. Despite continued support from AI-driven investment, the outlook remains uncertain as policymakers navigate inflation risks, slower growth, and geopolitical instability.