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Iran Conflict Sparks Market Downturn, Yields Surge in Q1
First Quarter, 2026
John R. Sides, CFA
The quarter began with benign expectations for growth, inflation and the labor market. Asset prices reflected the rosy outlook as equities pushed to all-time highs, bond yields were range-bound, and volatility suppressed. However, by the end of the quarter all focus shifted to the escalating conflict in Iran.
The most severe market reaction was witnessed in commodities and interest rates…
Record Shutdown, Rate Cuts and Curve Steepening in Q4
Fourth Quarter, 2025
John R. Sides, CFA
At midnight on October 1st, a 43-day shutdown of the Federal government commenced, the longest such event in U.S. history. As a result, for much of the quarter the release of standard economic data was either delayed or postponed indefinitely. Uncertainty around forward Fed policy grew more pronounced. Investors gravitated towards “alternative data” sources in an effort to pick apart the state of domestic growth…
Risk and Rates: Growth, Easing, and Repricing in Q3
Third Quarter, 2025
John R. Sides, CFA
The third quarter was characterized by a continued run-up in both risky asset classes and traditional safe havens. Equities, corporate credit, and securitized products all performed admirably, as did U.S. government bonds and precious metals like gold and silver. Despite a broad easing of financial conditions, the Federal Reserve took a dovish turn. At the annual…
Volatility Persists After Equity Rallies and Fed Pivot in Q2
Second Quarter, 2026
John R. Sides, CFA
At the end of the first quarter, global markets were mired in a weak macro environment, precipitated by the conflict in the Middle East. A shutdown of the Strait of Hormuz had severe implications. A protracted supply-driven energy shock would lead to a daisy chain of problems for global growth, inflation, and asset prices. Then, on March 31st , the first sign of an end to the conflict brought a sharp reversal in sentiment. It set off a strong tone for risk appetite that carried for much of the…
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