Lido Market Updates

23 March 2026

Monday Market Minute | 03.23.2026

By Sergio Dueñas, CFA, Investments & Analytics
Candice Richardson, CFA, Investments & Analytics
As of 3.20.26 | Source: Factset
As of 3.20.26 | Source: Factset

Market Update

The Iran conflict remains the primary market driver, pushing oil prices higher and increasing inflation risk. In response, the Fed held rates steady last week and signaled just one potential cut this year, while markets have shifted more hawkishly, now pricing little to no easing in 2026. As inflation concerns and higher for longer rates take hold, the 10-year Treasury yield has risen roughly 30 basis points over the past month, while the S&P 500 is down about 5% year-to-date. The dollar initially strengthened on geopolitical risk, reasserting its safe-haven role, but has since pulled back as other major central banks, including the ECB, BOJ, and BOE, have signaled tighter policy, narrowing the U.S. rate differential. The biggest risk in the market remains the duration of this war and we believe any news regarding a prolonged war could have repercussions for global growth.


The FOMC

The FOMC left rates unchanged, with the overall policy path largely intact relative to December. Chair Powell struck a cautious tone, emphasizing that it is too early to assess the economic impact of the Middle East conflict and that a wait-and-see approach remains appropriate. While the median rate outlook still points to one cut this year, the underlying tone shifted modestly hawkish. Inflation forecasts were revised higher for both 2026 and 2027, with little change to unemployment, and a meaningful portion of the Committee now expects no cuts at all. Powell reinforced that rate cuts will depend on clear progress on inflation, noting the Fed will not easily look through energy-driven price pressures. Importantly, the Fed also revised its estimate of the neutral rate higher to 3.125%, suggesting policy may not be as restrictive as previously thought. At the same time, longer-term growth expectations improved, reflecting increased optimism around productivity.


Sources:
https://markets.jpmorgan.com/jpmm/research.article_page?action=open&doc=GPS-5239594-0

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