By: Darren W. King | Wealth Management
Source: Bloomberg, Inc.
Key Takeaways:
Equity Strategy
After three years of equity returns averaging almost 20%; stock markets corrected in the first quarter following rising energy prices and the US war on Iran. We remain constructive on equity prospects for the year, especially after the latest correction in equity markets. Two of the limiting factors for equity returns; rising rates and slowing growth appear contained as long as the Iranian cease-fire and the orderly flow of energy products out of the Strait of Hormuz holds. We continue to favor cyclical sectors over defensive stocks and advise the continued diversification into a larger international, small cap, and value allocation. With earnings growth rates in 2026 somewhere in the 15% to 17% range; we see equity returns moving lockstep with continued earnings momentum.
Fixed Income Strategy
Our outlook is for interest rates to move lower following the Iran energy inflationary scare. For reference, the 10-year treasury yielded 3.94% at February month-end and is now trading at 4.28% on March 8. With bond maturities and reinvestment, we are extending duration and buying longer-dated maturities to take advantage of this run up in yields while it holds.
Click here to read the entire Q1 2026 Market Review.
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