BIS Quarterly Review (March 2026): shifts under the surface, volatility rises on Middle East conflictUnder a calm-looking market surface, the flow of money was changing
On March 16, 2026 the BIS published its Quarterly Review. It says markets appeared calm on the surface during the review period, but there were significant shifts under the surface as investors rotated away from previously high-performing assets, and the conflict in the Middle East in early March exacerbated volatility. Concerns over AI spending weighed on richly valued tech stocks, and gold, silver, oil and natural gas all moved sharply.
- Late 2025Funds move from US large cap stocks to European, Japanese and emerging market equities
- Early 2026Gold and silver surge
- Late January 2026The gold and silver rally ends abruptly
- Early March 2026The Middle East conflict escalates, oil and natural gas rise, and the dollar’s depreciation reverses
Key points
- In late 2025 investors moved away from US large cap and growth stocks; European and Japanese equities gained and emerging market equities gained even more; value and small cap stocks outperformed, and single-stock volatility far exceeded index volatility
- The US dollar depreciated through most of the period while the Swiss franc also appreciated notably, a hallmark of risk-off episodes; the dollar’s depreciation reversed as tensions in the Middle East escalated
- Gold and silver surged early in 2026 but the rally ended abruptly in late January, in part due to leveraged position unwinds; rising tensions in early March drove oil and natural gas prices significantly higher
- Sovereign bond markets diverged: long-term yields rose sharply in Japan while those in the United States and the euro area moved sideways; inflation expectations edged up and the expected timing of US rate cuts was pushed back
- Box A analyses how big US tech firms are increasingly funding AI infrastructure with borrowing, with gross corporate bond issuance topping $100 billion in 2025
What to do in practice
- Prepare for sudden swings in energy prices and exchange rates by reviewing the effect on purchasing and foreign-currency transactions
- In managing financial assets, assume that this is a phase in which markets can change direction easily
The BIS, an international organisation, has summed up what happened in the world’s financial markets. On the surface things looked calm, but investors were moving their money from what had been popular to other things. Then the conflict in the Middle East in early March added to this, and prices swung more widely.
- (1) MovesFrom big US tech stocks to shares in Europe, Japan and emerging economies
- (2) WorryVoices ask whether too much is being spent on AI
- (3) ShockIn early March the conflict in the Middle East escalates
- (4) SwingsOil and natural gas rise and market prices swing more widely
Points
- Money moved from big US tech stocks to shares in Europe, Japan and emerging economies
- Worries about spending too much on AI weighed on tech stocks
- Because of the conflict in the Middle East, oil and natural gas prices jumped and the dollar’s movement changed
What the words mean
- emerging economy
- a country whose economy is in the middle of growing quickly
- dollar
- the currency of the United States, widely used in world trade
During the review period, financial markets had to adjust to shifting currents. Even though markets initially appeared calm on the surface, there were significant shifts under the surface as investors rotated away from previously high-performing assets. Volatility began to creep up, exacerbated by the conflict in the Middle East in early March.
- Bank for International Settlements (BIS): BIS Quarterly Review, March 2026
- Bank for International Settlements (BIS): BIS Quarterly Review, March 2026, Overview: Markets recalibrate amid shifting currents
Economic news presents published statistics and outlooks. It is not investment solicitation or trading advice. Figures are as of publication and may be revised.
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