At a glance

Earnings growth, resilient consumers and steady credit markets still support investors, but weekend setbacks in the Strait of Hormuz keep oil, inflation and geopolitical risk in focus for investors.

Number of the week:

4.0%

The increase in the Producer Price Index in March compared to a year earlier, up from 3.4% in February.

Term of the week:

International Emergency Economic Powers Act

A federal law authorizing the President to regulate commerce, freeze foreign assets and impose sanctions in response to an "unusual and extraordinary threat" to national security, foreign policy or the economy originating outside the U.S. if a national emergency is declared.

Quote of the week:

Inflation data already reflects higher energy prices. The U.S. Producer Price Index (PPI) rose 0.5% in March and 4.0% from a year earlier, the largest annual increase since February 2023. Energy prices rose 8.5% in the month, including a 15.7% jump in gasoline, with average gas prices climbing above $4.10. Core PPI, which excludes volatile food and energy prices, eased from 3.8% to 3.7%, showing the shock still sits more in energy prices than the full economy. Meanwhile, goods prices increased 4.1% in March, suggesting tariff-related costs continue to feed into producer prices.

― Bill Merz, CFA, Senior Vice President, Head of Capital Markets Research and Portfolio Construction, U.S. Bank

U.S. Bank Asset Management Group

William Northey
Head of Asset Management Group

Kaush Amin
Head of Private Market Investing

Chad Burlingame
Head of Impact Investments

Thomas Hainlin
National Investment Strategist

Robert Haworth
Senior Investment Strategy Director

William Merz
Head of Capital Markets Research

Terry Sandven
Chief Equity Strategist

Global economy

Quick take: Weekend reports showed Iran again restricting passage through the Strait of Hormuz, putting a fresh spotlight on oil, inflation and global growth just as consumer spending and activity continue to show resilience.

  • Iran’s brief, but temporary, decision to allow commercial traffic through the Strait of Hormuz supported lower oil prices, lower government bond yields and stronger stock performance. Over the weekend, that progress reversed. The Associated Press and Reuters reported Iran again restricted passage, warned ships against transit and linked any reopening to the end of the U.S. blockade of Iranian ports. Roughly one-fifth of the world’s oil normally passes through this route, so the setback kept energy at the center of the macroeconomic outlook.
  • Inflation data already reflects higher energy prices. The U.S. Producer Price Index (PPI) rose 0.5% in March and 4.0% from a year earlier, the largest annual increase since February 2023. Energy prices rose 8.5% in the month, including a 15.7% jump in gasoline, with average gas prices climbing above $4.10. Core PPI, which excludes volatile food and energy prices, eased from 3.8% to 3.7%, showing the shock still sits more in energy prices than the full economy. Meanwhile, goods prices increased 4.1% in March, suggesting tariff-related costs continue to feed into producer prices.
  • Treasury Secretary Scott Bessent stated tariffs could return to prior levels by early July. In February, the Supreme Court ruled President Trump lacked authority under the International Emergency Economic Powers Act, which voided most of the tariffs he enacted in 2025. Following the ruling, President Trump announced a 10% global tariff under a separate trade act and launched Section 301 investigations into key trading partners, which could conclude by early July, allowing the Trump administration to reinstate tariffs under the Trade Act of 1974.
  • Outside the war, the broader economic backdrop reflects resilience. U.S. consumer spending rose 5.3% year-over-year through February, incomes rose 3.7% and economists still expect about 2.1% real gross domestic product growth in 2026. Outside the U.S., the United Kingdom (U.K.) economy grew faster than economists’ forecasts in February, while purchasing manager surveys due this week will provide insight into activity levels across the U.S., eurozone, Japan, U.K. and India.

Equity markets

Quick take: Last week’s rally reflected easing energy fears and broadening market leadership, but the weekend reversal in Hormuz raises the importance of earnings season, guidance and margin discipline for keeping stocks on firm ground.

  • Equity markets rallied last week, with investors viewing a more favorable energy path. Hopes for a Middle East off-ramp and a reopening of the Strait of Hormuz helped drive a broad rebound, pushing the S&P 500 up 4.6%, MSCI Emerging Markets up 3.2%, and developed markets MSCI EAFE up 2.2%. In the S&P 500, Information Technology rose 8.1%, Consumer Discretionary gained 6.6% and Communication Services added 6.3%, while Energy and several defensive groups lagged. Taken together, those moves showed stronger participation across growth-sensitive areas and helped the S&P 500 finish the week at a record high of 7,126.
  • First quarter company results and guidance are now in greater focus. Several large banks unofficially launched the first quarter reporting season last week, with results generally meeting or exceeding expectations. Companies highlighted strong capital markets activity, improving loan growth and benign credit trends. This week, 19% of S&P 500 companies will report results, followed by 37% the following week. FactSet expects first quarter revenue and earnings to increase 9.6% and 13.0%, respectively, year-over-year. Companies scheduled to report this week include UnitedHealth, Intuitive Surgical, Capital One, American Express, ServiceNow, United Airlines, Union Pacific and Intel. Investors will closely monitor consumer demand as well as capital spending trends and related profitability across upcoming technology earnings reports.
  • Fundamentals continue to support above-average valuations. Weekend news changed the short-term backdrop, but profit growth still provides the main support for stocks. Analysts expect S&P 500 earnings to grow 17.4% in 2026 and 16.0% in 2027. The index trades at roughly 22 times 2026 estimates and 19 times 2027 projections — levels that remain above long-term averages but below historical extremes.

Bond markets

Quick take: The bond market still points to workable financial conditions, with lower yields, solid demand for U.S. assets and contained inflation outside energy, helping investors maintain expectations for a patient Federal Reserve (Fed).

  • Bond markets sent a constructive message last week, even as the Iran war stayed at the center of the global story. Lower yields drove positive returns across most parts of the bond market, with both higher-quality and lower-quality bonds participating and longer-maturity bonds performing best. News of a possible Strait of Hormuz reopening also pushed government bond yields, inflation expectations and corporate borrowing costs lower. That combination supported broad gains and signaled that investors still see the energy shock as manageable rather than as the start of a deeper credit problem.
  • Foreign investors continue to demonstrate solid demand for U.S. assets. New Treasury data revealed that foreign investors purchased nearly $54 billion in corporate bonds and $21 billion in government-backed securities in February, both above typical levels and indicative of sustained demand for U.S. financial assets. Foreign investors bought only $2 billion in Treasury notes and bonds in February, but purchased $37 billion in January, a solid monthly total.
  • Markets continue to assume the Federal Reserve can stay patient. The Beige Book is a collection of economic anecdotes from businesses that the Fed releases eight times a year. The latest report described continued growth, stable labor demand, low turnover, few layoffs and only modest wage growth, even as firms cited the Middle East conflict and tariffs as fresh sources of uncertainty. Most firms reported that artificial intelligence (AI) had not materially affected overall staffing levels; however, some noted that AI-driven productivity gains allowed them to delay or reduce hiring. With headline inflation moving higher because of energy but core trends staying more restrained, investors still appear to believe the Fed can look through a temporary spike in prices if broader inflation pressure remains contained.

Real assets

Quick take: Real estate and infrastructure still benefit from improving fundamentals and long-term capital spending, while commodity prices remain the clearest expression for shifts in oil prices and the direction of the Iran war.

  • Real assets reflected the same positive sentiment shift that lifted equities last week. Public real estate gained 3.6%, helped by falling long-term interest rates and optimism that the Middle East war might move toward a less disruptive phase. Office real estate investment trusts (REITs) rose 8.0%, data centers gained 6.4%, and industrial properties advanced 5.1%, which showed investors rewarding segments tied to improving leasing trends, digital infrastructure and logistics demand. This supports the case that real estate fundamentals are improving in several parts of the market.
  • Infrastructure prices declined last week, but the long-term setup remains constructive. Global infrastructure fell, with utilities and energy infrastructure lagging, even though analysts still expect global industrials and utilities to grow earnings by about 8% this year. Ongoing data center investment also continues to support demand for pipelines, power systems and other energy-linked assets. That keeps the longer-term case intact, even when weekly returns move with oil prices.
  • Commodities remain the most sensitive to the Iran conflict outcome. Broad commodity exposures fell 0.6% last week as oil dropped 14.2%, gold rose 2.2%, silver gained 8.1%, copper rose 3.3% and aluminum increased 6.4%. However, weekend news complicates that picture, with Iran again restricting traffic through the Strait of Hormuz and supply constraints pushing prices higher once more. Real assets still provide useful diversification, but commodities remain highly volatile and sensitive to the direction of the Iran war and global energy supplies.
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This information represents the opinion of U.S. Bank. The views are subject to change at any time based on market or other conditions and are current as of the date indicated on the materials. This is not intended to be a forecast of future events or guarantee of future results. It is not intended to provide specific advice or to be construed as an offering of securities or recommendation to invest. Not for use as a primary basis of investment decisions. Not to be construed to meet the needs of any particular investor. Not a representation or solicitation or an offer to sell/buy any security. Investors should consult with their investment professional for advice concerning their particular situation. The factual information provided has been obtained from sources believed to be reliable but is not guaranteed as to accuracy or completeness. U.S. Bank is not affiliated or associated with any organizations mentioned.

Based on our strategic approach to creating diversified portfolios, guidelines are in place concerning the construction of portfolios and how investments should be allocated to specific asset classes based on client goals, objectives and tolerance for risk. Not all recommended asset classes will be suitable for every portfolio. Diversification and asset allocation do not guarantee returns or protect against losses.

Past performance is no guarantee of future results. All performance data, while obtained from sources deemed to be reliable, are not guaranteed for accuracy. Indexes shown are unmanaged and are not available for direct investment. The S&P 500 Index consists of 500 widely traded stocks that are considered to represent the performance of the U.S. stock market in general. The MSCI EAFE Index includes approximately 1,000 companies representing the stock markets of 21 countries in Europe, Australasia and the Far East (EAFE). The MSCI Emerging Markets Index is designed to measure equity market performance in global emerging markets. The Producer Price Index (PPI) is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller. The S&P Global Purchasing Managers' Index data are compiled by IHS Markit for more than 40 economies worldwide. The monthly data are derived from surveys of senior executives at private sector companies.

Equity securities are subject to stock market fluctuations that occur in response to economic and business developments. International investing involves special risks, including foreign taxation, currency risks, risks associated with possible differences in financial standards and other risks associated with future political and economic developments. Investing in emerging markets may involve greater risks than investing in more developed countries. In addition, concentration of investments in a single region may result in greater volatility. Investing in fixed income securities is subject to various risks, including changes in interest rates, credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications and other factors. Investment in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. Investments in lower-rated and non-rated securities present a greater risk of loss to principal and interest than higher-rated securities. Investments in high yield bonds offer the potential for high current income and attractive total return but involve certain risks. Changes in economic conditions or other circumstances may adversely affect a bond issuer's ability to make principal and interest payments. The municipal bond market is volatile and can be significantly affected by adverse tax, legislative or political changes and the financial condition of the issues of municipal securities. Interest rate increases can cause the price of a bond to decrease. Income on municipal bonds is free from federal taxes but may be subject to the federal alternative minimum tax (AMT), state and local taxes. There are special risks associated with investments in real assets such as commodities and real estate securities. For commodities, risks may include market price fluctuations, regulatory changes, interest rate changes, credit risk, economic changes and the impact of adverse political or financial factors. Investments in real estate securities can be subject to fluctuations in the value of the underlying properties, the effect of economic conditions on real estate values, changes in interest rates and risks related to renting properties (such as rental defaults).

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This information represents the opinion of U.S. Bank Wealth Management. The views are subject to change at any time based on market or other conditions and are current as of the date indicated on the materials. This is not intended to be a forecast of future events or guarantee of future results. It is not intended to provide specific advice or to be construed as an offering of securities or recommendation to invest. Not for use as a primary basis of investment decisions. Not to be construed to meet the needs of any particular investor. Not a representation or solicitation or an offer to sell/buy any security. Investors should consult with their investment professional for advice concerning their particular situation. The factual information provided has been obtained from sources believed to be reliable but is not guaranteed as to accuracy or completeness. U.S. Bank is not affiliated or associated with any organizations mentioned.

Based on our strategic approach to creating diversified portfolios, guidelines are in place concerning the construction of portfolios and how investments should be allocated to specific asset classes based on client goals, objectives and tolerance for risk. Not all recommended asset classes will be suitable for every portfolio.

Diversification and asset allocation do not guarantee returns or protect against losses.

Past performance is no guarantee of future results. All performance data, while obtained from sources deemed to be reliable, are not guaranteed for accuracy.

Equity securities are subject to stock market fluctuations that occur in response to economic and business developments.

International investing involves special risks, including foreign taxation, currency risks, risks associated with possible differences in financial standards and other risks associated with future political and economic developments. 

Investing in emerging markets may involve greater risks than investing in more developed countries. In addition, concentration of investments in a single region may result in greater volatility.

Investments in fixed income securities are subject to various risks, including changes in interest rates, credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications and other factors. Investment in fixed income securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term securities. Investments in lower-rated and non-rated securities present a greater risk of loss to principal and interest than higher-rated securities.

Investments in high yield bonds offer the potential for high current income and attractive total return, but involve certain risks. Changes in economic conditions or other circumstances may adversely affect a bond issuer’s ability to make principal and interest payments.

The municipal bond market is volatile and can be significantly affected by adverse tax, legislative or political changes and the financial condition of the issues of municipal securities. Interest rate increases can cause the price of a bond to decrease. Income on municipal bonds is free from federal taxes, but may be subject to the federal alternative minimum tax (AMT), state and local taxes.

There are special risks associated with investments in real assets such as commodities and real estate securities. For commodities, risks may include market price fluctuations, regulatory changes, interest rate changes, credit risk, economic changes and the impact of adverse political or financial factors. Investments in real estate securities can be subject to fluctuations in the value of the underlying properties, the effect of economic conditions on real estate values, changes in interest rates and risks related to renting properties (such as rental defaults).

Start of disclosure content

The information provided represents the opinion of U.S. Bank and is not intended to be a forecast of future events or guarantee of future results. It is not intended to provide specific investment advice and should not be construed as an offering of securities or recommendation to invest. Not for use as a primary basis of investment decisions. Not to be construed to meet the needs of any particular investor. Not a representation or solicitation or an offer to sell/buy any security. Investors should consult with their investment professional for advice concerning their particular situation.

U.S. Bank and its representatives do not provide tax or legal advice. Your tax and financial situation is unique. You should consult your tax and/or legal advisor for advice and information concerning your particular situation.