CIO SNAPSHOT:
We maintain a constructive stance in our asset allocation despite elevated volatility, though we recently reduced our equity overweight and trimmed U.S. concentration in favor of a more balanced posture. Within equities, we remain bullish on the AI supercycle, with targeted allocations to technology and power infrastructure, but believe we are in the middle of a longer rotation from “Bits” to “Atoms.” We trimmed Financials as credit conditions tightened, added Consumer Staples for defensive ballast, and increased international exposure through active value and emerging market strategies. In fixed income, we extended duration and reduced high yield, moving up in quality as private credit stress warrants a more defensive posture. We view this as a healthy rotation, not a cycle-ending event, and expect GDP to reaccelerate in the second half of 2026 as geopolitical noise fades, fiscal tailwinds build, and monetary policy turns more supportive.
Source: Dynasty Financial Partners, Bloomberg, Strategas, BCA, Goldman Sachs Research, YCharts, FactSet, Bureau of Labor Statistics, Federal Reserve, as of 04/13/2026
MACRO
Growth: The labor market rebounded in March, with the April 3rd jobs report showing +178k nonfarm payrolls, well above the +65k consensus expectation. The unemployment rate declined to 4.3%, and healthcare accounted for much of the gain as strike workers returned. However, the report also revised February sharply lower to -133k underscoring lingering softness beneath the headline recovery. Average hourly earnings cooled to +0.2% monthly and +3.5% annually, the lowest annual reading since May 2021. Separately, Q4 2025 GDP was revised down to just +0.5% annualized, well below the +0.7% prior estimate, signaling the economy lost momentum heading into 2026.
Inflation: The March CPI report, released April 10th, showed headline inflation at +3.3% year-over-year, just below the +3.4% consensus. The uptick from earlier in the year reflects the pass-through of surging energy costs following the Iran conflict, with gasoline and energy components driving much of the acceleration. Core PCE, released April 9th, held at +3.0% year-over-year, in line with expectations, confirming that services and shelter inflation remain sticky. The re-acceleration in headline CPI complicates the Fed’s path forward, particularly with the oil-driven supply shock still unfolding.
Monetary Policy:The Federal Reserve held rates steady at 3.50%-3.75% at its March 18th meeting, as widely expected. The updated dot plot maintained a median 2026 year-end rate of 3.375%, unchanged from December, implying one additional cut this year. However, the distribution revealed a deeply divided Committee, with seven members projecting one cut and seven projecting no change, highlighting the uncertainty around the inflation and growth outlook. Chair Powell emphasized maintaining maximum flexibility given the Middle East conflict and its potential second-round effects on inflation. Markets have pulled back expectations further, with Fed funds futures pricing closer to no cuts for the year.
MARKET
Equities: March was the worst month for the S&P 500 since September 2022, with the index falling nearly -5%. The selloff was notable for its breadth, as both growth and value moved lower, underscoring that the decline was driven by macro de-risking rather than style rotation. Emerging Markets fell over -9%, while international developed markets posted steep losses as energy-importing economies absorbed the oil shock. Energy was the lone bright spot, advancing over +10% on surging crude prices, marking two consecutive months of near-double-digit gains for the sector. All other ten sectors finished lower, with Consumer Staples, Industrials, and Health Care each declining roughly -8%.
Bonds: Fixed income reversed sharply in March as the Iran-driven energy shock reignited inflation fears. The 10-year Treasury yield surged roughly +38 basis points to 4.32%, while the 2-year climbed +42 basis points to 3.79%. The Bloomberg Aggregate fell nearly -1.8%, and long-duration Treasuries (TLT) dropped over -4.2%. Credit conditions tightened as risk sentiment deteriorated, erasing much of the first-quarter gains for core fixed income.
Currencies: The U.S. dollar staged a significant rally in March, gaining over +2% on the DXY, driven by safe-haven demand and the relative advantage of U.S. energy independence. The euro, pound, and yen all declined between -1.50% and -2.25% against the dollar as energy-importing economies faced deteriorating terms of trade.
Commodities: Commodities posted their strongest month since May 2009, with the Bloomberg Commodity Index surging over +15%. Oil was the clear driver, with USO gaining over +55% as Brent crude surged past $100 on Strait of Hormuz disruption fears. In a dramatic reversal, gold fell over -11% and silver plunged nearly -20%, as the stronger dollar, rising yields, and Gulf state liquidations overwhelmed safe-haven demand. The rotation from precious metals into energy marked a sharp departure from the first two months of the year.
Source: Dynasty Financial Partners, Bloomberg, Strategas, BCA, Goldman Sachs Research, YCharts, FactSet, Bureau of Labor Statistics, Federal Reserve, as of 04/13/2026
Markets Rocked by Energy Shock
March delivered a sweeping macro shock across asset classes as the Iran-driven energy crisis dominated markets. The month marked a dramatic shift in market leadership that sets a complex tone heading into April. Geopolitical uncertainty remains front and center as investors look to the Q1 earnings season to assess whether the challenging macroeconomic backdrop has weighed on fundamentals. The Fed’s rate cutting path has come under increasing pressure, with traders having largely priced out cuts through year-end, leaving incoming data as the key catalyst for any shifts in market expectations.
Source: Dynasty Financial Partners, Bloomberg, Strategas, BCA, Goldman Sachs Research, YCharts, FactSet, Bureau of Labor Statistics, Federal Reserve, as of 04/13/2026
CIO Spotlight: Private Credit Under Pressure, Creating Opportunities
Software not a monolith
Headlines around private credit stress have intensified in recent weeks, with alternative manager stock prices falling sharply, BDC redemptions accelerating, and questions mounting about whether the asset class faces systemic risk. We think the reality is more nuanced and more instructive. The stress in private credit is more concentrated in a subset of software lending, in particular loans originated in the 2021-2022 vintage when valuations were stretched, and base rates were near zero. The catalyst isn’t a traditional credit cycle deterioration. It’s a structural re-rating of certain software business models driven by AI disruption. Software companies, however, that have durable data moats, unique data sets, and embedded vertical workflows are leveraging AI to further optimize its competitive positioning.
Redemption pressure appears to be concentrated among retail investors rather than institutional allocators, as the chart below appears to reflect investor sentiment, rather than reaction to fundamentals. As Goldman Sachs has noted, many institutional investors are viewing this dislocation as an attractive re-entry point into the asset class, recognizing that the fundamentals of direct lending outside of the challenged software pocket remain sound.
Bottom line
Private credit continues to be an attractive long-term strategy. It is experiencing a concentrated, software-driven stress event that appears to be driven more by investor sentiment toward the broader software space and not by underlying fundamentals. For advisors, the key takeaway is twofold. First, the current environment reinforces why diversification across strategies and sectors within private credit is essential – concentrated exposure to any single borrower profile can amplify drawdowns regardless of the broader asset class backdrop. Second, the broader private credit opportunity set remains compelling. Strategies that have positioned themselves to come into this cycle with meaningful dry powder and well underwritten credits can take advantage of dislocation as retail capital comes out of the system. We continue to believe private credit plays an important role in diversified portfolios, but the lesson of this cycle is that how you access the asset class is just as important as whether you access it.
Source: Dynasty Financial Partners, Bloomberg, Strategas, BCA, Goldman Sachs Research, YCharts, FactSet, Bureau of Labor Statistics, Federal Reserve, as of 04/13/2026
DISCLOSURES
OpenArc Corporate Advisory, LLC, (“OpenArc”) is a registered investment adviser with the Securities and Exchange Commission. This material is presented for informational purposes only and should not be construed as an attempt to sell or solicit any products or services of OpenArc nor should it be construed as legal, accounting, tax or other professional advice. Past performance of model performance shown is no guarantee of future results. The model portfolio performance does not reflect actual trading or any advisory, management, or transaction fees, all of which could result in substantially lower results. This does not reflect the impact that material economic and market factors may have had on decision making. You cannot invest directly in an index.
This investment strategy is based on a model portfolio developed by Dynasty Wealth Management, LLC (“Model provider”), a registered investment adviser with the Securities and Exchange Commission. OpenArc retains full discretion over the implementation, customization, and management of client accounts using this model. The Model provider does not manage client accounts, does not provide individualized investment advice, and is not responsible for investment decisions, performance outcomes, or suitability determinations. The Model provider receives compensation from the underlying investments. Outsourcing costs range from 2 – 4 bps (program fee) and can be discounted based on assets under management. Outsourcing includes investment management, trading, billing, and communications. This fee will be absorbed by OpenArc.
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