Here are the latest market insights from the Goldman Sachs Wealth Management Investment Strategy Group (ISG).
At the end of February, a US-Israeli strike on Iran triggered a sharp escalation, with Iran retaliating by shutting down the Strait of Hormuz and launching attacks across Gulf countries.
Geopolitical tensions remained elevated throughout March, resulting in the largest oil production disruption on record. Against that backdrop, energy prices surged: Brent rose 49% in March, while European natural gas gained 62%.
Here’s a recap of what happened in the market and economy.
The energy shock is now feeding through to the macro outlook, putting upward pressure on inflation while weighing on growth, particularly in Asian and European economies that are large net importers of oil and gas.
By contrast, the US is relatively more insulated given its position as a major energy producer. More resilient US growth, together with safe-haven flows, has supported the dollar, with the DXY rising 2.4% over the month.
At the same time, the inflation impulse has pushed central banks toward a more hawkish stance. Markets have responded by either pricing out prospective rate cuts or beginning to pencil in hikes for 2026, driving a meaningful rise in yields in March. The 10-year US Treasury yield rose 38 basis points.
Risk assets also came under pressure, led by ex-US equities: MSCI EM declined 13.0%, MSCI EAFE fell 7.9%, and the S&P 500 dropped 5.0% over the month.
The situation in Iran remains highly uncertain, keeping markets on tenterhooks.
Beyond that, robust earnings and still-limited recession risk should provide relatively better support for US equities.
ISG downgraded their US 2026 GDP growth forecast to 2.1% from 2.4%, as higher energy prices are likely to weigh on activity.
Per ISG, the share of energy goods in total spending entered the episode near historic lows (~2% of Personal Consumption Expenditures) and unlike many other economies, the US is not facing an additional squeeze from higher natural gas prices.
On inflation, ISG also revised their forecasts higher and expects headline PCE inflation to peak at 3.6% (vs. 2.8% prior to the conflict), before easing to 2.7% by year-end (vs. 2.4% previously).
ISG now expects core PCE inflation to spend most of 2026 close to 3%, reflecting both upside surprises in recent inflation data and second round effects of higher energy prices.
At its March meeting, the Fed kept rates unchanged and adopted a more hawkish communications stance: projections for growth and inflation moved higher, many FOMC members shifted to fewer cuts, and Chair Jerome Powell emphasized that recent disinflation progress had been disappointing.
Against this backdrop, ISG revised their policy rate forecast for 2026, expecting the Fed to remain on hold for most of the year before one rate cut in December, compared with two previously in June and September.
ISG is closely monitoring the evolving situation in the Middle East. Also on the radar are several central bank meetings, with the Fed, the European Central Bank, the Bank of England and the Bank of Japan expected to remain on hold in April. Of note, President Donald Trump has now pushed back his March/April visit to China to mid-May.
In the latest Quarterly Investment Update, Mariam Kamshad, head of portfolio strategy and investments for Goldman Sachs Wealth Services, discusses key macroeconomic factors that may affect the market at the outset of the second quarter of 2026, including:
Expectations and forecasts are based on material assumptions which are subject to change and provide no guarantee of results. Past performance is not indicative of future results, which may vary.
Expected returns are estimates of hypothetical average returns of asset classes derived from statistical models. There can be no assurance that these returns can be achieved. Actual returns are likely to vary. These models are not a reliable indicator of future performance.
Forecasts refer to full-year average growth rates. Forecasts as of April 3, 2026. Sources: Investment Strategy Group, Goldman Sachs Global Investment Research, Haver, Bloomberg.
This material represents the views of the Investment Strategy Group (ISG) in Goldman Sachs Asset & Wealth Management (AWM) and is not a product of Goldman Sachs Global Investment Research (GIR). It is not research and is not intended as such. The views and opinions expressed by ISG may differ from those expressed by GIR, LP, or other departments or businesses of Goldman Sachs. Forecasts are estimated, based on assumptions, and subject to revision and may change as economic and market conditions change.
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