Perspectives
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Monthly Macro Monitor: March 2026
Read More- Geopolitical Tensions and Energy Markets: Geopolitical tensions in the Middle East escalated in March and drove significant financial market volatility throughout the month. The closure of the Strait of Hormuz drove a surge in oil prices, which is expected to have an ongoing inflationary impact.
- Employment: Key employment measures released in March were weaker than expected. U.S. nonfarm payrolls indicated that the U.S. economy lost 92,000 jobs in February, materially below consensus estimates and prior month levels, and the unemployment rate increased modestly month-over-month. Previously reported data for December and January were also revised lower by 69,000 total jobs.
- Inflation: Key inflation measures released in March were generally consistent with expectations, but potential distortions in PCE data remain until these releases return to the normal release schedule in April. The ongoing conflict in the Middle East, however, complicates the overall inflation picture, as soaring oil prices are expected to push inflation higher in the near-to-intermediate term.
- Federal Reserve and Monetary Policy: As expected, the FOMC maintained the 3.50-3.75% target range for the federal funds rate at its March meeting. Chair Powell characterized the current stance of monetary policy as “appropriate” to achieve its dual mandate goals, while acknowledging that the “implications of developments in the Middle East for the U.S. economy are uncertain.”
- Interest Rates and Agency MBS Spreads: This uncertain macroeconomic backdrop drove higher interest rates across the curve, elevated interest rate volatility, and wider Agency MBS spreads to benchmark rates on a month-over-month basis.
