Nick Botticelli and Matt Underwood, CFA, CAIA reflect on our positioning as markets entered 2026 with strong momentum, supported by solid earnings growth and improving sentiment. That changed quickly. The conflict involving Iran led to a sharp increase in oil prices, reversing early gains and pushing equities into correction territory. This geopolitical shock reintroduced volatility across markets and shifted the tone for the remainder of the quarter.

Expectations for Federal Reserve policy have shifted meaningfully. The policy path is now less certain and less accommodative, with greater sensitivity to incoming inflation data and energy dynamics.

In this environment, we are seeing a wider range of outcomes across markets. Volatility has increased, leadership has shifted, and diversification has become more important.