Market Notebook

PRICE ACTION:
Equity prices, as measured by the ticker SPY, closed lower while bond prices, as measured by the ticker BND, closed higher over the last week.

SPY     -2.23%
BND    -0.08%

TECHNICAL ANALYSIS:
SPY price is in a clear downtrend, closing Friday at a seven-month low.  The index has now broken meaningfully below its 200-day simple moving average and continues to make lower lows. This marks the fifth consecutive weekly decline, a losing streak not seen since 2022.

BND price appears to be in a downtrend as well.

SENTIMENT:
The three major averages have each fallen more than 7% month to date.  Price action suggests a deeply risk-off environment, with investor sentiment increasingly unsettled by the dual threat of rising energy prices and diminishing expectations for Federal Reserve relief. Markets now price in nearly a 50% chance of a Fed rate hike by December \[LongDash] a sharp reversal from earlier expectations of two rate cuts this year.  The VIX remains elevated, and the behavior of the market on a day-to-day basis continues to be dominated by geopolitical headlines rather than economic fundamentals.

ECONOMY AND FUNDAMENTALS:
The dominant story of the week, and indeed of the month, remains the ongoing U.S.-Israel military campaign against Iran, which began on February 28. Brent crude topped $110 after incidents in the Strait of Hormuz exacerbated investor energy supply concerns.  Energy is now the only S&P 500 sector with meaningful positive performance in 2026, while the rest of the market bears the weight of what higher oil and gas prices mean for both consumers and Federal Reserve policy.

On the monetary policy front, on March 18, the FOMC voted to hold the federal funds rate unchanged at 3.50%\[Dash]3.75%, with all members supporting the decision except Governor Miran, who dissented in favor of a 25 basis point cut.  The Fed’s posture has shifted noticeably more cautious in recent weeks, with multiple officials emphasizing that the energy shock complicates both sides of the dual mandate. Philadelphia Federal Reserve President Anna Paulson said Friday that inflation running above the central bank’s 2% target is making her more apprehensive about policy,  a sentiment that reinforced the market’s “higher for longer” repricing. The economy itself, while not yet visibly weakening, is being watched closely for signs that $100+ oil is beginning to weigh on consumer spending and business activity. Q1 GDP and March payrolls are on the calendar for the week ahead and will be important data points.

All the best during the week ahead!

Disclaimer: Nothing in this discussion should be considered investment advice. The content of this discussion is strictly my personal opinion and subject to change at a moment’s notice. Investment advice can only be provided to you by your investment professional and not by a general market discussion such as this one. If you wish to speak with an investment advisor, contact us. We can probably help.