After mostly treading water for the first two months of the year, both domestic and international equity markets began giving way once the war began. The equity markets, as represented by the S&P 500 and All Country World Index (ACWI), pulled back in March 2026. Interest rates remained roughly in a trading range of 4.0% to 4.4% as measured by the 10 Year Treasury. For the first quarter 2026, the S&P 500 returned -4.34%. The S&P Developed BMI returned -2.68% and the ICE BofA US Corporate, Government, and Mortgage Index returned -0.02%, while the Bloomberg US Aggregate Bond Index returned -0.05%

Within the equity segment of the Montag and Caldwell Global Tactical Allocation Model (GTAM), most holdings outperformed the All Country World Index (ACWI) given the broadening out of the markets and sectors. Our developed international holdings provided above benchmark returns despite a stronger dollar and growth concerns in the face of the war. Our emerging market exposure, represented by India, struggled given those same concerns and they are also very dependent on imported oil. 

Interest rates, as measured by the 10 Year Treasury, started the quarter at 4.17%. They moved lower in the quarter to 4.0% and then moved back up to 4.32% at quarter end. The Federal Reserve appears to be on hold for further rate cuts as it monitors the impact of higher energy prices at the current time.

After ending 2025 on a softer note with fourth quarter real GDP growth of just +0.7% quarter-over-quarter annualized, the current forecast for first quarter real GDP from the Atlanta Fed’s GDPNow model shows a modest step up to +1.6%. Those more muted growth rates mask the underlying strength of end demand. Real final sales to private domestic purchasers, a measure of consumption and private fixed investment, have been growing steadily for the past two years, averaging +2.6%. Consumer spending has been supportive, with a stable - albeit somewhat fragile - labor market, rising wages, and appreciating asset values, especially for higher income earners.

The S&P 500 Index is an unmanaged index commonly used as benchmark to measure U.S. stock market performance and characteristics.

The S&P Developed BMI (Broad Market Index) is an unmanaged index considered a comprehensive view of the global equity investment opportunity set across a number of developed countries, capturing stocks across the market cap spectrum (large, mid and small). The Index is a subset of the S&P Global Broad Market Index ("S&P Global BMI"), which includes both developed countries and emerging markets.

The Ice BofA US Corporate, Government & Mortgage Index is an unmanaged index that is used as a benchmark to measure fixed income performance and characteristics.

The Bloomberg US Aggregate Bond Index (often called "the Agg") is a flagship, market-capitalization-weighted benchmark that measures the performance of the U.S. investment-grade, fixed-rate, taxable bond market.