March 4, 2026

We wanted to provide a brief note to everyone on our view of the geopolitical events that have unfolded recently.

On February 28, 2026, the United States and Israel coordinated air strikes against Iran, targeting military infrastructures and Iranian leaders. The initial objective is to eliminate the threat of Iran obtaining nuclear weapons. This was not a complete surprise as the U.S. has been assembling a show of force the last few weeks. The timing may have caught the public and capital markets off guard.

To no one’s surprise, the price of oil moved higher from around $64 per barrel to $78 per barrel and now settling at $74 per barrel. The U.S dollar rose 1.50% proving its status as a safe-haven currency. The uncertainty for both the stock and bond markets is twofold 1) will inflation move higher due to rising oil prices 2) do higher oil prices translate to slower U.S. GDP growth.

It’s way too early to see any long-term effects from this conflict. How will the Federal Open Market Committee (FOMC) react? Will the U.S. need to issue more debt to fund a possible prolonged conflict? So far, the markets are behaving well. There were certainly knee-jerk reactions with daily volatility in equity markets and interest rates moving slightly higher after reaching a three-month low.

From our perspective, as long as the ten-year U.S. treasury stays below 4.50%, the equity market should continue to perform. The equities in the portfolios have been outperforming so far in 2026 as there has been a slow rotation from the tech sector into financial and industrials which is seen in the outperformance of the equal weight S&P 500 versus the market weight S&P 500 by 5.6%.

We will be closely monitoring inflation indicators and economic growth data as the conflict continues. If this is a prolonged event (meaning several quarters) this may have an effect on data so we will see how the administration, U.S. Treasury and the FOMC respond and we will respond accordingly.