March 21, 2026 Market Update

Market Recap

The week began with a notable “relief rally” on Monday, as a temporary dip in crude oil prices allowed major equity indexes to post their strongest sessions in over a month. However, that optimism proved short-lived, with concerns intensifying as the week progressed that damage to oil and natural gas infrastructure combined with high interest rates could lead to stagflation.

In the bond market, the break from traditional “flight-to-safety” behavior typically seen during global crises continued. Concerns about the inflationary impact of higher energy and supply chain costs led to bond traders’ demands for higher yields, reinforcing expectations that interest rates may remain elevated for longer.

Until geopolitical developments stabilize, investors should expect continued volatility as new information is incorporated into prices. 

Market Performance

Market Commentary: The Fog of War

The conflict in Iran has introduced a renewed layer of uncertainty into the markets. Questions include - to what extent will it raise inflation, slow the economy, or cut into corporate profits. Nobody knows. But the key question for long-term investors is whether it warrants a tactical reduction in their exposure to the more vulnerable components of their portfolios.

Geopolitical events tend to have a limited and temporary impact on markets unless they coincide with an economy that is already weakening. At present, that does not appear to be the case. However, the longer the conflict persists, the greater the risk that higher energy costs will weigh on economic activity and pressure the Federal Reserve to maintain higher rates, increasing the likelihood of a more sustained downturn in both stocks and bonds.

For now, Mr. Market appears to be adjusting rather than reacting, but that balance could shift quickly if new information suggests the conflict will have repercussions well beyond its formal end. Accordingly, investors should commit to a plan for the weeks and months ahead should conditions deteriorate further.

Are you comfortable riding out market turmoil if it worsens? If not, there are ways to further limit your portfolio’s volatility. Please let me know if you’d care to discuss them, and the trade-offs associated with that protection.

In Case You Missed It: I’ll Take That Bet.

Warren Buffet once famously offered a $1 Billion prize to anyone who completed a perfect NCAA bracket. It wasn’t much of a gamble for him though, considering even with a degree of skill factored in, the odds of doing so are roughly 1 in 120 billion.