First Quarter Newsletter
Responsible Guidance: First Quarter 2026 Newsletter, April 2026
Market performance changes, but plan discipline remains…
After a strong year in 2025, the first quarter of 2026 served as a reminder that markets do not move in a straight line. Periods of strength are often followed by periods of pause, and sometimes volatility, as investors process new information around inflation, interest rates, and global events. As you may have heard us say “performance leaders rotate.”
These moments can feel uncomfortable, but they are also normal. In fact, they often test one of the most important principles of long-term investing: the ability to stay disciplined when headlines become more uncertain.
At Baron Financial Group, we believe your unique financial plan should serve as an anchor, what we call Your Personal Economy℠. It’s a personal framework designed to help you tune out noise and stay focused on what matters most: achieving your goals. In the pages that follow, we will review what happened in the first quarter of 2026, as we help you plan for what comes next. Your Personal Economy℠ is at the center of the process, and we aim to help you answer the most important financial question: “Am I going to be okay?”
A Global Perspective
A core objective for our customized Baron Financial Group investment strategies is global diversification, meaning strategies can include investments based both in the U.S., as well as internationally in developed and developing or emerging countries. There are popular benchmark indexes that provide perspectives about the performance of global investments.
Global equities struggled in the first quarter. The MSCI ACWI All Cap Index, representing stock investments across 23 developed and 24 emerging markets, was down 2.74%, primarily from U.S large-cap technology losses. International markets, though not as bad as U.S. large caps, were still impacted by geopolitical tensions, private credit fears, and inflation concerns.
The FTSE World Government Bond Index tracks sovereign debt from 20 countries, denominated in their respective currencies. The index was also negative, declining 1.05% in the first quarter. The index's modest loss reflected the complex interplay between flight-to-quality demand that usually occurs for bonds during times of geopolitical unrest, offset by inflation concerns, and the impact of dollar strength on international bonds.
U.S. Economy
The U.S. economy continued to grow, but at a slower rate than the previous quarter. The Atlanta Federal Reserve’s recent forecast for the first quarter is moderately positive. Jobs continue to be added, but the unemployment rate remains above 4%. The Federal Reserve has held steady during recent meetings, as inflation concerns resurfaced.
According to the Bureau of Economic Analysis (BEA) the U.S. economy grew by 0.5% in the 4th quarter of 2025, based on the third and final estimate. The primary drivers for growth were increases in consumer spending and investment (the full press release can be found at https://www.bea.gov).
Due to the normal delay in receiving growth data from the BEA, the Federal Reserve Bank of Atlanta publishes a “nowcast” by estimating GDP growth for the most recent quarter (in this case the first quarter of 2026) using an approach like the BEA. On April 9, 2026, the estimate for first quarter GDP from the Federal Reserve Bank of Atlanta suggests growth may continue, forecasting a 1.3% growth rate. Please note that this estimate updates regularly and is subject to change. The “nowcast,” along with the methodology, and additional information can be found at: https://www.atlantafed.org/cqer/research/gdpnow
According to the Bureau of Labor Statistics (BLS), the U.S. gained 178,000 jobs for the month of March, and the unemployment rate decreased to 4.3% from 4.4% at the start of the year. BLS indicated job growth was notable for health care, construction, and in transportation and warehousing (full press release can be found at: https://www.bls.gov).
U.S. Stocks
The S&P 500, an index consisting of roughly 500 of the largest U.S. domestic stocks, was negative in the first quarter, down 4.33%, which has not happened very often in the last decade. Over that time only 9 of the 40 quarters had negative returns. The downturn was mostly driven by declines in growth stocks, more specifically tech stocks.
For technical analysts and trend followers, the index oscillated around the 50-day moving average during the first two months but was below the average for all of March. The index dropped below the 200-day moving average in mid-to-late March and finished the quarter below the 200-day.
Dividing index components into growth and value, value-focused stocks outperformed in the first quarter, as they did in the 4th quarter of last year. Time will tell if value stocks are regaining performance dominance, as growth stocks have mostly dominated over the last decade. Value last outperformed on a calendar-year basis in 2022, when most equity indexes were struggling.
International Stocks
International-developed-country stocks (such as those in the European Union and Japan), measured by the MSCI EAFE Index, declined 1.24% in the first quarter. Though performance was better than the S&P 500, international stocks were still impacted by global macro headwinds as previously mentioned.
Non-developed, or emerging-country stocks (such as those located in Brazil, India, and China), measured by the MSCI EM Index, were flat, down 0.17%.
International stock indexes’ outperformance in the first quarter of 2026 continued from 2025. Stocks outside the U.S. were helped by attractive valuations on a relative basis, and a weaker dollar (for U.S. investors), along with other factors. Prior to 2025, the last time international stocks outperformed U.S stocks on a calendar-year basis was 2022.
Bonds
U.S. Domestic Fixed Income (bonds), as measured by the Barclays U.S. Aggregate Bond Index (gauges performance of investment-grade intermediate bonds), was flat, down 0.05% in the first quarter. The Federal Reserve paused its rate-cutting cycle that started in September 2025. There was a little bit of a tug-of-war, as inflation and private credit concerns which might normally push yields higher, were offset by flight-to-quality bond buying that can occur during geopolitical concerns, which normally pushes yields lower. When demand for bonds increases, typically prices rise and interest rates fall, possibly resulting in gains for existing bond holders. However, the opposite can occur when there are more bond sellers than buyers.
The 10-year U.S. Treasury bond yield finished the first quarter at 4.30%, slightly higher than 4.18%, at the start of the year.
A yield curve plots interest rates against the time-to-maturity to earn those rates. We continue to monitor the changing shape of the yield curve for U.S. debt issues, and what that may signal. Using the U.S. Government 2-year bond rate as a proxy for short-term rates and the 10-year U.S. Government bond rate as a proxy for long-term rates, we calculate the difference between the rates, which provides a possible indicator for the future direction of the economy. A steep spread (long-term rates higher than short-term rates) indicates potential future economic expansion, and fixed-income investors are compensated for taking longer-term risks. A flat spread (long-term rates match short-term rates) is a possible indicator of economic uncertainty, and longer-term investors are not being compensated for investing in longer-dated securities. An inverted spread (short-term rates are higher than long-term rates) possibly indicates future economic contraction.
At the end of the first quarter, the 2-year rate was 3.79% (and 10-year, 4.30% per above), keeping the shape of the yield curve positive, at 51 basis points (a basis point represents 1/100 of 1%). However, the shape of the curve was slightly flatter than at the start of the year, at 71 basis points. With the Federal Reserve pausing interest-rate cuts, short-term rates have moved up, causing the flatter shaped curve and possibly indicating that bond investors are less confident about future U.S. economic growth.
Real Estate and Housing
Commercial real estate, as measured by the FTSE NAREIT All Equity REIT (Real Estate Investment Trust) Index, was up 3.76% in the first quarter, which was a turnaround from the fourth quarter. The strength in REITs mostly came in February, which posed an attractive rate environment that temporarily reduced financing costs.
According to Freddie Mac (FM), the average 30-year residential home mortgage rate increased to 6.37% (as of 04/09/2026) from 6.15% at the start of the year. At this time a year ago, the rate was 6.62%.
Natural Resources
The Bloomberg Commodity Index continued momentum from last year and was up 24.41% in the first quarter. This was by far the best performing index that we cover in our newsletter. Energy prices including oil and industrial metals, such as copper, contributed to the huge quarter.
Baron Client Strategies
Planning for multiple outcomes with Your Personal EconomySM is critical to helping our clients answer the simple question "Am I going to be OK?".
As Registered Investment Advisers (fiduciaries) and Fee-Only advisors, we do not receive a commission for making investment transactions. Our decisions are grounded in your goals. A big reason your Baron team makes trades is to align clients' portfolios with their customized, risk-appropriate globally-diversified strategy. We believe these actions potentially strengthen clients' portfolios or financial positions. We use this same approach with our own personal money.
No matter the economic environment, our basic principles remain:
Create a globally-diversified and risk-appropriate strategy. Validate the investment choices versus peer investments. Rebalance when needed. Test the strategy in a comprehensive financial plan and obtain regular feedback to update information and advance your financial position.
Your Service Plan
One of our primary roles is to educate our clients to make informed decisions about reaching their goals. Critical to that process are plan reviews, a process that focuses our attention on your goals, takes account of any changes in your situation, and allows us to alter the course, as necessary. If you have experienced any changes to your financial position or are considering changing financial goals and objectives, please let us know.
Your Personal EconomySM
There is no shortage of headlines that can create uncertainty. Topics such as the geopolitical tensions driven by the war in Iran, articles discussing issues surrounding private credit markets, and inflation concerns, just to name a few. Though you may be following those stories and the impacts on markets, the more important focus is Your Personal EconomySM. Our plan for Your Personal EconomySM is developed by considering both your willingness and your ability to take risk. Willingness is based on your behavior, how you feel when markets go down and if you can stay invested when headlines get noisy. Ability is based on math such as withdrawal rates, spending flexibility, and surplus of resources, to name a few. Using this approach helps create a plan you maintain during different market cycles, because it is built specifically for your circumstance. Remember that diversified investors who stick with their strategy tend to survive market volatility. Of course, past performance does not indicate future performance. Please reach out if you have any questions about your willingness and ability to take risk in Your Personal EconomySM. |
Concluding Comments
The first quarter of 2026 is a helpful reminder that even in strong long-term markets, periods of uncertainty and declines are part of the process. While headlines may shift quickly, a well-constructed financial plan is designed to account for a range of outcomes, not just the most recent one.
As always, we are here to help you stay aligned with your personal goals and navigate Your Personal EconomySM.
Baron Updates
For our clients and friends, we hope you enjoyed our recent Client Appreciation Event in Sarasota, Florida. It’s always a pleasure spending time together at Ed Smith Stadium, especially when it includes great company, a Yankees vs. Orioles Spring Training Baseball game, and beautiful Florida sunshine. Visit our “BFG at the ballpark” blog post for some fun pictures and Oriole-bird trivia.
Please save October 8, 2026 for our next Client Appreciation Casino Night Event in New Jersey. Details to follow. We hope to see many of you there!
As we move into the second quarter, we invite you to visit our website blog for timely resources designed to support your financial journey. April is “Financial Literacy Month” and the perfect time to read or view our educational content on a wealth of financial topics, such as retirement and financial planning, Social Security, Market Update videos, taxes, and more. If you are wondering what documents are important to update, read our blog outlining key documents that should be reviewed periodically to ensure everything stays current.
In the coming weeks, keep an eye out for new posts covering important financial numbers for 2026, recent recognition awards for our advisors, and an introduction to the newest member of our Baron Team, Colleen Celmer.
As always, our advisors are honored to be a trusted resource — not only for our clients, but also for journalists seeking insights on financial planning and investing. You can explore some of these featured articles in our blog as well.
For those of you who are new to the Baron portal, you can visit our website to gain access to your client portal. Just click on the client-portal tab, which will allow you to view your account information. The client login requires a username and password to gain access to the portal. Please let us know if you would like to create your portal login or if you would like to learn more about what the portal provides, including paperless statements. Please also let us know if you would like to transition to the newer portal. Contact Baron at 1-866-333-6659 or at info@baron-financial.com to enroll.
Please contact us if you would like a copy of our current registration (ADV) with the Securities and Exchange Commission. You can contact our firm (www.baron-financial.com) at 1-866-333-6659 or at info@baron-financial.com. You can also find our ADV through the Investment Adviser Public Disclosure system at www.adviserinfo.sec.gov.
A creative update to note - this quarter we refreshed the look of our hard-copy newsletter. It will mail to clients shortly. We hope you enjoy the new look and find it easy to read!
We look forward to staying connected and continuing to support you every step of the way. Please let us know if you have any questions or changes to discuss with us.
As always, thank you for your continued support!
Warmest Regards,
Baron Financial Group, LLC
www.baron-financial.com
This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of April 10, 2026, and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by Baron Financial Group to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. Past performance is no guarantee of future results. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Investment involves risks. International investing involves additional risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments. The two main risks related to fixed income investing are interest rate risk and credit risk. Typically, when interest rates rise, there is a corresponding decline in the market value of bonds. Credit risk refers to the possibility that the issuer of the bond will not be able to make principal and interest payments. Index performance is shown for illustrative purposes only. You cannot invest directly in an index. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for a client or prospective client’s investment portfolio. Historical performance results for investment indices and/or categories generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results. Inclusion of index information is not intended to suggest that its performance is equivalent or similar to that of the historical investments whose returns are presented or that investment with our firm is an absolute alternative to investments in the index (if such investment were possible). Investors should be aware that the referenced benchmark funds may have a different composition, volatility, risk, investment philosophy, holding times, and/or other investment-related factors that may affect the benchmark funds’ ultimate performance results. Therefore, an investor’s individual results may vary significantly from the benchmark’s performance.