Economic Update 4-06-2026

During a short market week due to Good Friday, economic data included improvements in manufacturing and retail sales, continued decelerating home prices, while the employment situation report for March surprised on the upside.

Equities ended sharply higher to break a month-long negative streak with hopes for a near-term Middle East resolution. Bonds fared positively as well, with expectations for inflation pulling back leading to lower yields. Commodities remained strong with oil prices mixed to higher, as were metals.

U.S. stocks ended the shortened holiday week positively, up several percent, as the U.S. administration showed signs of optimism over the U.S.-Iran conflict, with the President hinting at flexibility on the Strait of Hormuz and Iran’s increased willingness to negotiate.

Nearly all sectors ended higher, led by recent laggards communications and technology, as well as materials, all up several percent, while recent champion energy fell back by over -3% as hopes for a Middle East resolution is assumed to lead to ultimately lower oil prices (although U.S. prices rose for the week). Real estate also rose several percent along with a drop in interest rates.

Foreign stocks also saw even decent gains across Europe and the U.K., while Japan was flattish, with the optimism for oil supply disruptions ending sooner than later. Aside from the stress of higher oil prices, and higher regional dependence on Middle East supplies, the threat of several developed central banks raising policy rates to battle expected inflation has added a wrinkle not yet seen in the U.S. Emerging markets also saw gains, but to a lesser degree with commodity-oriented nations, such as Brazil, Mexico, and South Africa outshining other recent winners, including tech-focused South Korea and Taiwan.

Bonds also fared well for the week as interest rates came back down, with the trickle-down effect of potentially eased Middle East conflict leading to lower oil, to lower inflation, to lower yields. With a pro-risk environment, corporates fared better than U.S. Treasuries, with emerging market bonds faring best of all.

Commodities gained on net for the week, energy again leading the way, followed by gains of a few percent in precious and industrial metals. West Texas crude oil rose over 12% last week to $112/barrel, while Brent crude fell back by -3% to $109/barrel, with differing supply dynamics resulting from Middle East hopes.

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Sources:  LSA Portfolio Analytics, American Association for Individual Investors (AAII), Associated Press, Barclays Capital, Bloomberg, Deutsche Bank, FactSet, Financial Times, Goldman Sachs, JPMorgan Asset Management, Kiplinger’s, Marketfield Asset Management, Minyanville, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, Payden & Rygel, PIMCO, Rafferty Capital Markets, LLC, Schroder’s, Standard & Poor’s, The Conference Board, Thomson Reuters, U.S. Bureau of Economic Analysis, U.S. Federal Reserve, Wells Capital Management, Yahoo!, Zacks Investment Research.  Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return/excluding dividends.  Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.

The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness.  All information and opinions expressed are subject to change without notice.  Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.