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Q3 2026 Market Perspective

As we go on about our lives, it’s almost unimaginable that war in other parts of the world continues. The present time has shown us how conflicts in other countries can have a huge impact on our daily lives. Take the US-Iran war, for example: it has had repercussions for US consumers and economies worldwide. As the war continues, supply chain disruptions in the oil and gas industries create pressure that trickles down to other industries and ultimately to consumers. Although the US economy has proved resilient, this added pressure has made concerns about higher inflation more prominent. The current conditions in the Middle East pose a risk to the global economy and financial markets, shifting the market outlook for the second half of the year. Due to stubborn inflation, we no longer expect interest rate cuts. On the contrary, an interest rate hike is more likely. However, as investors continue to navigate the ever-changing market, we encourage them to remain adaptable and focused on their long-term financial goals.

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Inflation

Concerns about higher inflation have risen, and the US-Iran war has exacerbated this issue. When looking at Core CPI (Consumer Price Index) and Core PCE (Personal Consumption Expenditures), both of which exclude volatile items such as food and energy, we can see they have been trending upward since February 2026, but at a slower pace than the headline CPI and PCE. For the last two years, the Fed (The Federal Reserve) has somehow managed to keep inflation relatively stable, but the rise in energy prices has caused headline CPI to rise at a higher rate. As shown in the chart below, CPI has increased to 4.2% year-over-year (YoY) as of May 2026, with energy remaining the main contributor.



Surprisingly, the CPI report for June showed inflation eased to 3.8% YoY (Year Over Year) from 4.2% YoY in May, boosting economic optimism for the Fed and consumers. This is great news for the Fed as it navigates the current landscape. Achieving its 2% inflation target has been an uphill battle for the Fed in recent years, and this shift in economic reports changes its course of action. Although a change in the Federal Funds rate is unlikely in July, we believe the main predictor of changes in monetary policy is the outcome of the US-Iran war.


Interest Rates

The Fed once again faces the challenge of bringing inflation down. Another variable has been added to the equation: the US-Iran war may determine the Fed’s next move. Back in March 2026, the FOMC (Federal Open Market Committee) released a summary of economic projections. Compared with June’s numbers, we have seen revisions to Core PCE and the Federal Funds Rate. Core PCE was updated to 3.3% YoY for 2026, currently at 3.4% YoY for May, and the Federal Funds rate was updated from 3.4% to 3.8% for the end-of-year projection, meaning that we may not see a reduction in interest rates in 2026. Fortunately, the labor market remains solid. Unemployment has remained relatively stable, currently at 4.2% YoY for June. The new Fed Chair, Kevin Warsh, has avoided providing forward guidance, a tactic that could help remove unrealistic expectations among banks and investors about the decisions the Fed will implement. It could also mean significant uncertainty about future interest rates.

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US-Iran War

For a brief moment, we thought the war was over, but the conflict has escalated after attacks on ships going through the Strait of Hormuz. In mid-June, a memorandum of understanding was signed by the US President and the Iranian President. This peace deal stipulated that the Strait of Hormuz would reopen, allowing ships to pass without sanctions. However, after the Strait reopened, many ships began to pass, causing congestion and other problems. The main reason for the peace deal collapsing was Iran’s attack on three commercial vessels, which prompted the US to retaliate. Ever since the ceasefire was declared over, Iran has begun enforcing its own tolls, energy prices have risen, and negotiations continue. Market volatility may continue as this conflict lingers longer than anticipated.


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CWM Portfolios

Despite global conflict and market volatility, Q2 delivered strong returns across all asset classes, reinforcing the importance of maintaining a diversified portfolio in any market environment. When looking at sector performance, energy and tech continue to lead.

From our perspective, the market has remained resilient despite global turmoil. While we recognize the opportunities this environment presents, we remain cautious to avoid excessive concentration in areas that could expose our portfolios to unnecessary risk. As your advisor, our role is to guide you and separate the facts from short-term market noise. Staying disciplined and focused on your long-term plan is the most effective way to achieve financial success.





















Corinthian Wealth Management is your partner in finances. We are a resource when you have questions, and if you want to know how something will impact your financial situation, please contact your main advisor at (408) 995-0915.

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Advisory services offered through Corinthian Wealth Management, Inc., a Registered Investment Advisor.



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