The Markets – March 23, 2026

The interest rate outlook shifted.

Last week, central banks around the globe met to set policy rates. While most chose to leave rates unchanged, many expressed concern about the potential economic consequences of the War in Iran, reported Holly Ellyatt of CNBC.

“Central bankers in Japan, Indonesia and Taiwan opted to stay on the sidelines, as did their counterparts in the U.S., Canada, the U.K. and Europe. The notable exception was Australia, where policymakers narrowly voted to raise rates…,” reported Jihye Lee and Fabiana Negrin Ochoa in Morningstar News.

The Federal Reserve held rates steady

In the United States, the Federal Open Market Committee (FOMC), which is the Federal Reserve’s (Fed’s) rate-setting body, kept the federal funds rate unchanged. In addition, the FOMC summary of economic projections indicated Fed officials expect to see faster economic growth and higher inflation in 2026. Nicole Goodkind of Barron’s described the Fed’s current challenge:

“One rate cut technically remains on the table this year. But the bar to deliver it is higher. The Fed is caught between an inflation overshoot it can’t dismiss, an oil shock it can’t predict, a labor market on a knife’s edge, and a leadership transition tangled in legal uncertainty,” reported Goodkind.

At the post-meeting press conference, Fed Chair Jerome Powell indicated he plans to remain on the Fed board until a new Chair is confirmed and the current investigation of the Fed by the Department of Justice is finished.

Investor optimism faded

Investors considered the actions and rhetoric of global central banks and seemed to settle on the idea that policy rates could move higher this year. In response, bond yields began to rise.

“Global bond markets extended one of their biggest selloffs in a year on Friday, taking benchmark Treasury bonds sharply higher and weighing on stocks in markets around the world, with investors ripping up bets on central bank interest rate cuts as war in the Middle East shows no signs of ending,” reported Martin Baccardax of Barron’s.

Last week, major U.S. stock indexes moved lower, while yields on most maturities of U.S. Treasuries moved higher.

S&P 500, Dow Jones Global ex-US, S&P GSCI Gold Index, Bloomberg Commodity Index returns exclude reinvested dividends. The three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

WHAT’S THE DIFFERENCE BETWEEN GENERATIVE AI AND AGENTIC AI? Many Americans rely on artificial intelligence (AI) tools every day, sometimes without realizing they’re doing so. Voice-activated home assistants, for example, are useful for checking the weather, setting reminders, or listening to music. Voice assistants are just one form of AI. Over the past few years, two more powerful approaches have emerged that are reshaping how we work: generative (gen) AI and agentic AI.

Gen AI: Responds to prompts

Gen AI chatbots have become widely available. This type of AI is reactive and task-oriented, helping people conduct research, draft emails, create images, write music, and code websites, reported Adam Zewe of MIT News. Gen AI systems:

• Recognize patterns and rely on that knowledge to predict what comes next.
• Respond to user prompts, which affect the quality of output.

One drawback is that AI chatbots can hallucinate, meaning they confidently generate inaccurate answers. When using gen AI, human guidance and oversight are required to ensure the quality of the end product.

AI agent: Acts on its own

Last year, agentic AI became more prevalent. Agentic AI systems are partially or fully autonomous, meaning they perceive, reason, and act without human supervision, according to Beth Stackpole of MIT’s Ideas Made to Matter. AI agents are:

• Integrated with software systems to complete complex tasks independently, and
• Contained by robust strategy and risk management frameworks.

There are risks and challenges to agentic AI. Stackpole cautioned that organizations implementing these tools may find them to be unreliable or prone to unethical behavior. There are also cybersecurity and accountability issues.

What do we want AI to do?

Recently, Bloomberg’s Sommer Saadi and Stephanie Flanders spoke with Nobel Prize–winning economist Daron Acemoglu, who believes that “the greatest economic benefits would come from ‘pro-worker AI’ that enhances human capabilities, enabling workers to perform more complex and valuable tasks. But current business incentives, market structures and policy frameworks favor labor replacement.”

As AI continues to evolve, the stakes of getting it right are becoming considerably higher. The question is no longer how AI can help us work smarter; it’s how we ensure these tools serve people. Whether the future belongs to pro-worker AI or labor-replacing automation will depend less on the technology and more on the choices organizations, policymakers, and workers make today.

WEEKLY FOCUS – THINK ABOUT IT

“Even the darkest night will end and the sun will rise.”

― Victor Hugo, Author

Warm regards,

Daniel J. Murphy, CFP®
Murphy Wealth Management Group
60 Merritt Blvd., Suite 106
Fishkill, NY 12524

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