Economic and Market Commentary – March 2026
- Apr 22
- 5 min read
Economic and Market Commentary – March 2026
In March, geopolitical frictions in the Middle East dominated headlines and recurring news cycles as the conflict between both the U.S. and Israeli militaries and Iran’s paramilitary IRGC forces intensified throughout the month. The U.S. and Israel embarked on a bombing campaign in Iran, with the intention of demolishing IRGC military bases, degrading the corps’ missile and drone arsenals, and eradicating Iran’s nuclear facilities and weapons program, along with the nation’s ambitions to harbor enriched uranium. In retaliation, the IRGC, and supported proxy forces, responded by launching missile and drone attacks targeting; 1. U.S. and Israeli consulates and military installations in the Gulf region, and 2. Energy-related infrastructure (production facilities, refineries, depots, export hubs) in surrounding Gulf nations. Overshadowing the aforementioned, it was the third retaliatory tactic that has catalyzed a potentially severe and pivotal disturbance encompassing pervasive global ramifications: The IRGC has blocked most incoming and outgoing maritime traffic in the Strait of Hormuz, effectively closing a critical chokepoint that typically sees one-fifth of global oil supply, and other essential commodities, transit through the passageway daily. International Energy Agency (IEA) Executive Director, Fatih Birol, categorized the Strait’s closure as “a major energy crisis, including the largest supply disruption in the history of the global oil market.”
On March 18, at the conclusion of the Fed’s second policy meeting of the calendar year, the FOMC voted 11-1 to leave its overnight benchmark rate unchanged, maintaining the federal funds target rate range at 3.50% - 3.75%. Dissenting for the fourth time in only his fourth meeting as a Fed Board Governor, Stephen Miran cast the lone dissenting vote, preferring to have lowered the target rate range 25 basis points. Moreover, adhering to quarter-end months’ policy meeting protocol, the Fed released its updated Summary of Economic Projections (SEP), which provided deeper insights into the Committee’s assumptions and forecasted trajectory for the remainder of 2026. Revised from December 2025’s projections, the change in real GDP was ticked up +0.1% to 2.4%, while the unemployment rate was held steady at 4.4%. Headline PCE inflation and core PCE inflation were boosted +0.3% and +0.2%, respectively, both slated to end the year at 2.7%. Concerning interest rates, the median federal funds rate was unchanged at 3.4%, indicating an aggregate expectation of one 25 basis point rate cut, and the longer-run neutral rate was inched up +0.1% to 3.1%.
Over the past year and a half, we’ve continued to reference the updated dot plot which has depicted the disparities that exist amongst Fed officials regarding future target range adjustments. This quarter’s dot plot was no different. Of the 19 policymaking members, 25 basis point rate movements were as follows: No moves – seven members; One rate cut – seven members; Two rate cuts – two members; Three rate cuts – two members, Four rate cuts – one member.
Given the recency of the geopolitical ructions and the accompanying exogenous, energy-centric supply-side shock, Fed officials remained on the sidelines as volatility and uncertainty perturbed U.S. and global markets. Major U.S. bond and stock market indices slumped, as yields rose across the curve, while volatility indices – MOVE (bonds) and VIX (stocks) – oscillated erratically, both finishing the month higher than their starting points. Regarding oil, Brent Crude jumped +$40.61, closing at $118.35/bbl, and WTI climbed +$30.51, closing at $101.38/bbl.
U.S. Treasury yield curve endured a prodigious bear steepening as the 1yr – 30yr tenors all saw double-digit ascents, while shorter money-market tenors rose single digits. Flaring geopolitical tensions and energy-related disruptions resurrected inflationary concerns.
2-year/10-year spread: 52 basis points
3-month/10-year spread: 64 basis points
2-year/5-year spread: 15 basis points
3-month/30-year spread: 124 basis points
U.S. Treasury Yield Curve Source: Bloomberg
March 2026 Macroeconomic Highlights
Inflation, Expectations, and Consumer Sentiment1:
CPI: 2.4% year-over-year (+0.3% month-over-month); Core CPI: 2.5% year-over-year (+0.2% month-over-month)
PCE: 2.8% year-over-year (+0.3% month-over-month);Core PCE: 3.1% year-over-year (+0.4% month-over-month)
PPI: 3.4% year-over-year (+0.7% month-over-month); Core PPI: 3.9% year-over-year (+0.5% month-over-month) Core PPI less trade services: 3.5% year-over-year (+0.5% month-over-month)
Inflation Expectations: 1-year horizon: 3.0%, 3-year horizon: 3.0%, and 5-year horizon: 3.0%
Consumer Sentiment: 53.3 vs. 56.6 in February 2026; Current Conditions: 55.8 vs. 56.6 in February 2026
Consumer Expectations: 51.7 vs. 56.6 in February 2026
Labor Market2: The U.S. economy shed -92,000 nonfarm payrolls in February, vastly short of the +55,000 expected by economists surveyed by Bloomberg. Notable job losses occurred in health care (-28,000), reflecting strike activity, information (-11,000), transportation and warehousing (-11,000), and federal government (-10,000).
U-3 official unemployment rate: 4.4% vs. 4.3% expectation: +0.1% from January 2026.
U-6 unemployment rate (marginalized, part-time workers for economic reasons): 7.9% (-0.1%).
Labor force participation rate: 62.0% (-0.5%); Employment-to-population ratio: 59.3% (-0.5%).
Average hourly earnings for private nonfarm payrolls rose 15 cents to $37.32 (+0.4% month-over-month, +3.8% year-over-year).
Revisions: January 2026 pared -4,000 to +126,000; December 2025 clipped -65,000 to -17,000.
Gross Domestic Product (GDP)3: According to the second estimate, real GDP increased at an annual rate of +0.7% in the fourth quarter of 2025 vs. +4.4% in the third quarter of 2025. Real GDP increased +2.1% in 2025.
Consumption: +2.0%; GDP Price Index: +3.8%; PCE Price Index: +2.9%; Core PCE Price Index +2.7%.
Real disposable personal income: +0.2% vs. +1.0% in the third quarter of 2025.
Personal savings rate as a percentage of disposable income: 4.0% vs. 4.4% in the third quarter of 2025.
Housing Market4: Existing-home sales improved +1.7% (month-over-month) from January to a seasonally-adjusted annual rate of 4.09 million in February. Month-over-month sales advanced in the West, South, and Midwest, +8.2%, +1.6%, and +1.1%, respectively, but retreated -6.0% in the Northeast.
Year-over-year sales ebbed -1.4%, down from 4.15 million in February 2025.
Total housing inventory registered 1.29 million units, +2.4% from January, and +4.9% from one year ago (1.23 million units). Unsold inventory sits at a 3.8-month supply at the current sales pace.
The median existing-home price for all housing types was $398,000, +0.3% from February 2025 ($396,800), as prices rose in the Northeast, Midwest, and South, but abated in the West.
Average commitment rate for a 30-year, conventional, fixed-rate mortgage: 5.98%.
New Home Sales: 587,000 (-17.6% month-over-month) – January 2026 reading.
1 Source: Bureau of Labor Statistics (BLS), U.S. Department of Commerce, Federal Reserve Bank of New York – Survey of Consumer Expectations, and University of Michigan Surveys of Consumers
2 Source: Bureau of Labor Statistics (BLS)
3 Source: Bureau of Economic Analysis (BEA)
4 Source: National Association of Realtors (NAR), U.S. Census Bureau, and The Department of Housing and Urban Development
The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance. Investing involves risk including loss of principal. Forecasts contained herein are for illustrative purposes only, may be based upon proprietary research and are developed through analysis of historical public data.
