March 2026
CIO Perspectives: The rotation underway
Over the weekend of February 28–March 1, the
Renewed geopolitical instability is weighing on investors’ sentiment already strained by shifting narratives around artificial intelligence (AI) disruption, potential AI overspending, and U.S. policy uncertainty. If oil prices continue to extend their gains, current economic and earnings projections would be undermined, which would likely drive market volatility higher and risk prompting a more material pullback in equity prices. Interest rates are being pulled between safe-haven demand and the inflationary impulse from higher oil prices. So far, the latter dynamic has prevailed, with the U.S. 10-year Treasury yield up 20 basis points (bps) last week. Finally, gold may continue to benefit in this environment. As investors continue to price in a larger risk premium in traditional asset classes due to spreading geopolitical and policy uncertainty, a prolonged conflict in the Middle East could extend this dynamic and drive sustained demand for gold.
The situation is the Middle East remains highly fluid and—as of this writing—we see four potential scenarios unfolding:
1. Swift removal of the regime (including the IRGC) by the U.S. or a popular uprising. This could lead to outcomes ranging from a transition to democracy, to chaos and the breakdown of the Iranian state into several factions. Markets would struggle to price such uncertainty, and oil prices would likely continue to . . .
Author
Niladri ‘Neel’ Mukherjee
TIAA Wealth Management Chief Investment Officer
Author
Alberto Favalli-Ragusini
TIAA Wealth Management Director, Investment Strategist
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