March 2026 Market Update: Key Trends Shaping Global Markets

After three consecutive years of strong equity returns, investors are entering 2026 in a very different environment.

In our latest market update discussion, Matt L. Peden and Mac Owens of the True North investment team, reviewed several key themes shaping the global investment landscape.

International Markets Regain Leadership

International equities outperformed U.S. markets in 2025, marking a notable shift after several years of U.S. dominance. Three primary drivers contributed to this performance:

  – A weaker U.S. dollar, which boosted foreign returns for U.S. investors

  – Strong gains in European financial stocks

  – Increased fiscal spending across several global economies

While international markets may continue to perform well, the primary case for global exposure remains diversification rather than short-term outperformance.

Returns May Be More Earnings-Driven

U.S. markets have experienced significant gains over the past three years, driven in part by valuation expansion in large technology companies. Looking ahead, market expectations are shifting toward earnings growth as the primary driver of returns, with forecasts for the S&P 500 currently in the range of 8–10% for 2026. However, investors should expect greater volatility as markets transition into this phase.

AI Spending Is Expanding Into Credit Markets

Artificial intelligence continues to drive significant capital investment among technology companies. While many initially funded this spending through cash reserves, companies are increasingly issuing debt to finance further expansion. This trend is introducing new dynamics into corporate bond markets, where AI-related issuers now represent a meaningful share of new issuance. For investors, it highlights the importance of understanding concentration risks across both equity and fixed-income allocations.

Credit Markets Require Greater Discipline

Credit valuations remain historically tight, particularly in corporate bonds. Within private credit, headline returns have remained strong in recent years. However, careful underwriting and manager selection remain critical—especially as the industry continues to grow rapidly. At True North, we believe the lower middle market often offers more attractive opportunities than larger syndicated transactions due to better structure and alignment.

The K-Shaped Economy Continues

Despite strong equity markets and economic growth, consumer sentiment remains divided. Higher-income households now account for a disproportionate share of economic consumption, while many middle-income households continue to face pressure from rising costs in housing, healthcare, insurance, and education. This divergence, often described as a K-shaped economy, is likely to remain an important factor shaping economic policy and market behavior in the coming years.

Staying Focused on Long-Term Discipline

Markets rarely move in a straight line. After an extended period of strong performance, investors should expect a more nuanced environment ahead. Disciplined portfolio construction, diversification, and thoughtful risk management remain central to navigating the opportunities and risks that lie ahead.