Rates Head Higher As Market Turmoil Erupts – Fixed Income Update

Rates rose in March propelled by rising oil and gasoline prices, hindering the Fed’s objective of eventually easing rates. Treasury yields rose across all maturities as markets expected the Fed to abandon its rate reduction promises due to rising inflationary threats. Historically, funds flow into Treasuries during periods of conflict and war, yet the Middle East conflict has influenced Treasuries differently, with rising oil prices stoking inflation. Mortgage rates climbed to their highest levels since October, depressing application activity for new and refi-loans. The average rate for a 30 year conforming mortgage loan was 6.46% at the beginning of April, up from 5.98% at the beginning of March. Inflation and jobs data will determine what the next move will be by the Federal Reserve. (Sources: U.S. Treasury, FreddieMac, Federal Reserve)

Volatility Picks Up With Middle East Conflict – Equity Market Overview

Stocks wavered in March following the start of the Middle East conflict. Volatility rose significantly and abated day to day as details of the conflict and what was expected to transpire fueled speculation. Earnings have become a focal concern as elevated gasoline and diesel prices may eventually seep into corporate profitability. Consumer sentiment has also become an indicator as to where household expenditures might be allocated. All major equity indices reacted as the war erupted, with oil stocks leading while nearly every other sector faltered. Oil industry stocks tend to appreciate as the price of oil rises since their margins increase without any additional expenses. Markets have thus far tested valuations of technology and other growth sectors as the Middle East turmoil has exposed the risks of market fragility. The energy sector was the only positive performing sector in March, gaining 10% as oil related stocks drove prices higher within the sector. (Sources: S&P, Bloomberg, Reuters)

How A Supply Shock Raises Gasoline Prices – Energy Industry Overview

The rapid and unexpected disruption in the supply and transportation of oil, as a result of the Middle East conflict, sent oil prices to nearly double their price prior to the conflict. Historically, supply shocks occurred in 1973 with the OAPEC Embargo, the 1979 Iranian Revolution, the 1990 Gulf War, and currently the Strait of Hormuz. Such abrupt disruptions in supply and transit of oil can lead to devastating affects on imported energy reliant countries and their economies. Economies globally rely on steady and consistent fuel supplies, which allows companies and governments to plan accordingly for current and future energy needs. When a supply chain is disrupted, prices rise and future plans may be derailed. As oil transports cease, then there is no crude to refine into gasoline, sending supplies lower and prices higher. Countries that have no refineries or oil reserves of their own, tend to suffer the most from supply shocks. The abundance of refineries and oil reserves that the U.S. has, theoretically will buffer the initial onset of the supply shock, allowing oil drillers and producers to gradually increase production to meet demand. Historically, gasoline prices tend to climb much faster than falling, which means that even if a cease-fire successfully occurs, prices may not fall as quickly as they rose. The reason behind this is that gas-station operators, whose margins shrink with quick climbs in wholesale costs, tend to lower prices more gradually while they sell more expensive supplies first. (Sources: International Energy Agency, U.S. Dept. of Energy)

The Challenge With Expanding Data Centers & Energy Usage – Utilities Sector Update 

The current number of data centers under construction will need the equivalent amount of electricity as the entire country of Italy. As of early 2026, there are over 4,000 operational data centers in the United States, with nearly 3,000 additional new facilities either planned or under construction.

Data centers consume an enormous amount of electricity, with eight of the regional power grids in the United States already at or below critical spare capacity levels. The Edison Electric Institute estimates that utility companies will spend $1.1 trillion between 2025 and 2029 on capital projects in order to expand electricity generation.

Data centers are becoming increasingly debated among politicians and local representatives, since these enormous structures employ just a small number of workers and produce little if any collateral benefits for local communities. Most concerning is the amount of power data centers divert from local homes and communities, having led to utility price increases and rate hikes among various states. Some states have been more approachable than others in working with utilities and their expansion projects in order to provide the electric demanded by data centers.

The majority of the billions of dollars that the large tech companies are spending on AI infrastructure build-out is going towards actual semiconductors, hardware and buildings, with a fraction being spent on electricity. What is driving the growth estimates for utility companies are the numerous decade plus contracts being signed with these tech companies, ensuring years of revenue growth.

Texas leads data center development and construction, providing large land areas, rapid permitting, and a deregulated electric grid that allows developers to access power easily.

Sources: Dept. of Energy, Edison Electric Institute, EPA