Geopolitical headlines continue to materially impact market sentiment, and the latest news flow has been constructive. Israel and Lebanon agreed to a ten-day ceasefire that appears to be holding, and the larger conflict between the US and Iran is also de-escalating. Although the statements from the US administration point to an imminent deal between the US and Iran, military resources continue to increase in the region, and the Chandler team is concerned about the longer-term impact on the worldwide economic outlook linked to the year-to-date increase in commodity prices. Regardless of the timeline for resolving the conflict, the global economic outlook will be affected by the damage already done to the ability to deliver oil and other commodities from the Middle East.
The US economy has remained largely insulated from the impact of the conflict, and recent economic data has been mostly constructive. Headline PPI for final demand rose 0.5% on a monthly basis, well below the 1.1% consensus, and 4.0% on an annual basis. Core PPI, excluding food and energy, increased just 0.1% for the month and 3.8% from a year ago, also well below expectations. Regional manufacturing data was also positive, with the Philadelphia Fed index rising to 26.7 in April from 18.1 and the Empire Manufacturing index rebounding to 11.0 from negative territory, while industrial production for March fell 0.5%, missing expectations for a modest gain. The employment picture is also holding up well, with the ADP weekly employment change a positive 39.25k and weekly jobless claims remaining low at 207k for the week ending April 10th. The higher level of interest rates on a year-to-date basis and an evolving outlook for the trajectory of monetary policy are negatively influencing the housing market, as existing home sales declined 3.6% in March to a 3.98 million-unit annual pace, and homebuilder confidence slipped to 34, the lowest reading of the year.
The domestic capital markets are having a strong week, with the S&P 500 set to close above 7,100, which is well above the 50, 100, and 200-day moving averages. Treasury yields were also lower on the week, with a notable improvement in short-maturity tenors, implying that market participants are more comfortable with the near-term impact of increased energy prices on inflation’s trajectory being short-lived. The Chandler team is forecasting monetary policy to remain stable over our six-month forecast horizon, but still believes the next move by the Federal Reserve will be a reduction in the Fed Funds rate, bringing the target range more into the ‘middle’ of estimates of the neutral rate. The overall investment team remains vigilant in our risk management focus, ensuring portfolios under our purview are positioned to deliver stable, risk-adjusted returns in a challenging market environment.
Next Week: ADP Weekly Employment Change, Philadelphia Fed Non-Manufacturing Activity, Retail Sales, Business Inventories, Pending Home Sales, MBA Mortgage Applications, Chicago Fed National Activity Index, Jobless Claims, S&P Global U.S. Manufacturing PMI, S&P Global U.S. Services PMI, Kansas City Fed Manufacturing Activity, University of Michigan Sentiment.
© 2026 Chandler Asset Management, Inc. An SEC Registered Investment Adviser. Data source: Bloomberg, Federal Reserve, and ADP. This report is provided for informational purposes only and should not be construed as specific investment or legal advice. The information contained herein was obtained from sources believed to be reliable as of the date of publication, but may become outdated or superseded at any time without notice. Any opinions or views expressed are based on current market conditions and are subject to change. This report may contain forecasts and forward-looking statements which are inherently limited and should not be relied upon as an indicator of future results. Past performance is not indicative of future results. This report is not intended to constitute an offer, solicitation, recommendation, or advice regarding any securities or investment strategy and should not be regarded by recipients as a substitute for the exercise of their own judgment. Fixed income investments are subject to interest rate, credit, and market risk. Interest rate risk: The value of fixed income investments will decline as interest rates rise. Credit risk: the possibility that the borrower may not be able to repay interest and principal. Low-rated bonds generally have to pay higher interest rates to attract investors willing to take on greater risk. Market risk: the bond market, in general, could decline due to economic conditions, especially during periods of rising interest rates.