Investment Commentary | March 2026

Beware the ides of March, indeed. The war in Iran has grabbed all the headlines for good reason. The attack resulted in constraints on the movement of oil, which has impacted just about everything.

Rising Oil Prices Trigger Inflation and Market Repricing

Higher oil prices move through economies quickly increasing cost, slowing growth, and driving down sentiment. Market participants quickly interpreted higher oil prices as inflationary, and began pricing in fewer interest rate cuts this year, and even some potential increases.

This hit stocks across the globe. The S&P 500 was down 4.98%, the S&P MidCap 400 and S&P SmallCap 600 were also down 5.39% and 4.07%, respectively. Foreign stocks were not spared, as a majority or foreign countries depend on oil from either Russia or the Middle East more than the US. The S&P Developed ex-US Broad market Index was down 11.19%, while the S&P Emerging BMI suffered a 9.88% drop for the month.

Global Economic Slowdown Raises Stagflation Concerns

Across all markets, the story is the same: increased costs, slower growth. While economies haven’t hit the point of the 1973 oil embargo, the shock to the system certainly has shades. That embargo ushered in stagflation – high inflation and low growth, which defined the 70’s economy. The longer that oil prices stay high or climb higher the more uncertain the outlook becomes.

Bond Market Declines as Yields Rise Across All Durations

Fixed income was not spared as investors and traders pushed yields higher. S&P US Aggregate Bond index was down 1.77% for the month. Normally, in times of stress investors seek safety in US Treasuries, pushing interest rates down. This time bonds with maturities from 3 months to 30 years all experience rate increases, pushing the value of existing bonds down.

Federal Reserve Uncertainty Adds to Market Volatility

These increases come at an uncertain time for the Federal Reserve (Fed) with debt and deficits continuing to climb at an alarming rate. The confirmation process for Kevin Warsh, the Federal Reserve Chair nominee, has yet to get started and market participants are curious what changes he may usher in.

Precious Metals Decline Despite Safe Haven Status

Precious metals are typically considered a safe haven in times of geopolitical stress but also saw declines. The S&P GCSI Precious Metals index declined 12.25% for the month. The dollar showed strength throughout the month as a safe haven, and due to its role in the global oil trade. The stronger dollar and increased rates make precious metals more expensive in foreign currency and less competitive with higher yielding assets.

Energy, Livestock, and Agriculture Lead Monthly Gains

The few winners for the month were Energy, Livestock, and Agriculture. The S&P GSCI indices for each returned 53.36%, 2.82% and 4.57% respectively.

Investment Outlook Hinges on Oil Supply and War Resolution

Until there is clarity as to the end of the war, and importantly, getting oil flowing again it is hard to see the risk assets such as stocks moving higher.

Investor allocations to Treasury Inflation Protected Securities (TIPS), shorter maturity bonds, and energy stocks may reduce some of the downside. But if the war does end quickly and oil flows freely, markets may change quickly, favoring stocks and precious metals again.

A Potential Turning Point for Markets and Investors

The Ides of March marked a turning point in history, and investors are now looking for a turning point in the war with Iran.

Investment Commentary by Jason Flores, CFA, CAIA – Executive Vice President & Chief Investment Officer at Central Trust Company.

At Central Trust Company, we continue to reassess the rapidly changing investment landscape for both risks and opportunities. If you would like to access our full monthly outlook and additional investment commentary, visit our Investments Learning Center. As always, if you have questions or concerns, please contact your Central Trust Company team. We are always ready to help.