Insights

Quarterly Economic Commentary - April 2026

As is our practice at the close of each quarter, we take time to reflect on recent developments and reassess the broader outlook for both the markets and the global economy. Given the pace and significance of events over the past 30–45 days, this period has warranted a more deliberate and comprehensive review. Until late yesterday evening, global markets appeared to be approaching a potentially consequential geopolitical inflection point. The announcement of a two-week ceasefire has provided a degree of near-term relief, which has been reflected in market activity. However, it is important to emphasize that this development represents a pause in tensions rather than a durable
resolution.

The current environment remains highly fluid, with conditions capable of shifting rapidly. Early reports of alleged ceasefire violations by both parties underscore the fragility of the situation and reinforce the need for caution when interpreting short-term market movements. While geopolitical outcomes are inherently difficult to predict, periods such as this often carry an elevated risk of miscalculation, particularly when heightened rhetoric and emotional responses begin to influence decision-making. From a historical standpoint, negotiations involving Iran have frequently been complex and marked by limited transparency and inconsistent adherence to agreements. While each situation carries its own nuances, it is reasonable to approach current developments with a degree of skepticism. One potential interpretation is that the ceasefire may serve as a temporary mechanism for strategic repositioning rather than a step toward lasting de-escalation.

Against this backdrop, we do not anticipate a swift or definitive resolution in the near term. Instead, the more probable path forward is one characterized by ongoing uncertainty, intermittent volatility, and evolving risk dynamics. As always, we remain focused on maintaining a disciplined, risk-aware approach while closely monitoring developments as they unfold. While we hope for a constructive and peaceful outcome, our positioning continues to reflect the reality that geopolitical risks remain elevated and unresolved.

Until March, we were having another great year in the market. Despite a slight increase in unemployment, the market was strong, inflation was drifting lower, earnings were healthy, oil prices were steady, and the economy seemed destined for another low, double-digit return. Until March, the Dow and the S&P 500 were positive, with the NASDAQ being slightly negative. Now, oil prices are moving more like a roller coaster, moving down almost 15% today. March saw a modest spike in inflation, but that doesn’t even account for the rise in oil prices. However, I suspect the March inflation rate will rise, keeping the Fed on the sidelines indefinitely. If oil prices are at current levels by the end of April, inflation will once again become a major concern for the Fed and, more importantly, consumers. The Fed does not meet in May, so the next time after April’s inflation numbers would be mid-June. I suspect that if inflation moves up in March and April, at the June meeting, they may have the May inflation numbers as well, and you could see significant discussion about raising interest rates to nip inflation. Remember, last time the Fed was behind the curve on rising inflation, calling it transitory, so I suspect they would be proactive in this situation.

The Fed is in a transition year. Chairman Powell’s tenure as Chairman ends in May. He still has two years on the Board, but he will no longer be in charge. President Trump has nominated Kevin Warsh as the next Chairman of the Fed. However, he has not yet been confirmed by Congress. I don’t expect any major changes in the Fed's strategy, but I'm certain inflation will be an issue this year; just how much is the key factor.

Despite the markets turning negative in March, several sectors have performed very well so far this year. Energy is up 33.5%; Materials are up 11.0%, and Utilities are up 9.4%. The three worst sectors are Consumer Discretionary, down 9.7%; Financials, down 9.1%; and Technology, down 7.4%.

Fixed Income continues to sit stagnant so far this year. The 10-year Treasury is down 0.2%, U.S. bonds are up 0.2%, and Munis are up 0.1%. The yield on the 10-year Treasury is 4.28%, while the 2-year Treasury is 3.78%, a 50-basis-point spread. The interest rates on CDs are still sub-4 % but have slightly increased over the past few weeks.

In summary, we remain attentive to the current geopolitical environment and the potential for further developments in the near term. While risks are elevated, there is a clear path toward a more constructive outcome. An amicable resolution—characterized by easing tensions, stable energy markets, secure transit through the Strait of Hormuz, and more measured rhetoric—would provide meaningful support to both global markets and the broader economy. Such progress would likely reinforce market stability, reduce economic vulnerability, and improve overall consumer confidence. In the near term, while consumers have faced some pressure, factors such as tax refunds have provided a degree of support. As these temporary tailwinds moderate, sustained economic momentum will increasingly depend on improving underlying conditions. A timely and constructive resolution would be beneficial for all parties involved and would help reestablish a more favorable backdrop for growth. Under those conditions, markets would be well-positioned to regain their footing and continue progressing toward a strong year.

As mentioned in previous newsletters, we implemented our new system at the end of February. While we are still learning all the “bells and whistles” of this system, we can report that the transition was a huge success. The transition took place from Saturday, February 28th, and Sunday, March 1st. At 9:30 am Monday, March 2nd, all assets were verified as having been transferred/received. By now, you should have received your new online access link. If not, please reach out to Heidi Watkins or James Wilson. Noah and I are currently working with the new system administrator to provide you with an in-depth performance report. It should be ready to go by the end of the 2nd quarter and include all your historical performance data from the inception of your account with us.

There is one unique change that has come about from the transition. Previously, if a client needed cash, we would transfer it and then make the necessary sales to cover that distribution, even if it created an overdraft on the account. Our auditors have told us they don’t like us having any overdrafts. Now, we must ensure we have the cash available before we can make the distribution. However, that only takes one business day. Most of the time, this will not affect you. We try to keep a small percentage available in cash for potential distributions. The one business day delay would apply if it were a large distribution and we needed to sell an asset to cover the amount. Please keep that in mind and, if possible, give us at least 1 day’s notice. In this section, when I reference “cash,” that is the Kestrel Money Market. To make this more favorable for our clients, the Bank has agreed to pay 3.25% interest on this money market fund, which is a fantastic rate.

Additionally, I wanted to introduce you to our newest team member, James Wilson. James joined us a couple of weeks before the system conversion. He has previously worked with the trust department at a bank in the Raleigh, NC area. He is a graduate of Campbell University’s Trust and Investment program. He will assist Heidi and work closely with the relationship managers as part of our support team. Thanks to you, we have been blessed to grow significantly and expand our footprint. Now, we are building for the future.

As always, we are honored to work with you and your families. We welcome your feedback, questions, and your sharing your concerns with us. We understand that this is your money, and we are your stewards.