The month seemed to have a singular focus. One that painted the monitor red. Will markets continue this trend into April?
Fixed Income: 2-Yr Treas Yield 3.79% | 10-Yr Treas. Yield 4.30%
Interest rates drifted up to start the month of March as markets were reacting to the war in Iran. The crucial Strait of Hormuz was closed following the onset of the war. This strait is where 20% of the global oil supply, not to mention other consumer goods, flows from. With the constriction of supply, came higher oil prices. This led to greater concerns around resurgent inflationary pressures. The Federal Reserve Board (FRB) meeting mid-month, did nothing to alleviate these fears. The drift turned into a full-blown move higher as rates from 2-year bonds through 30-year bonds all rose.
Interestingly the effect that elevated oil prices have on the economy is the potential for demand destruction. If you have very elevated gas prices, the consumer begins to choose between their gas tank and the stores. The FRB raising interest rates is to curb consumer demand that would be driving inflation. This is not the case with this current bout of inflation. In fact, the tool at the FRB’s disposal causes the same effect that prolonged higher oil prices would cause.
*ustreasuryyieldcurve.com
Equities: Dow Jones 0.17% | S&P 500 0.87% | NASDAQ 3.38%
The one-month performance for markets has been bleak. The uncertainty around access to the Strait of Hormuz has clouded market projections going forward. At its worst point the S&P500 was down 9.5% as of 3/27/2026, inching closer to a market correction of 10% or greater for the S&P500. Markets rebounded the following week on hopes of a peace deal coming together.
*https://www.morningstar.com/markets as of 4/3/2026
*investing.com/indices/us-spx-500
Conclusion
The month absolutely centered around Iran and the impact oil disruption could have on the global economy. Conflicts tend to be repricing events where markets are focused on the conflict for a short period of time while they price in a new normal. That was clearly on display for March.
A Look Ahead…
As we move into April, we should see reduced focus on the Iran war and a more focus on economic factors, like the start of earnings season for the first quarter. Inflation readings and FRB expectations should be crucial as we move into the summer months.
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