Disclaimer: The portfolio referenced below is a 60% equity / 40% fixed income model portfolio. The equity sleeve consists of a combination of individual securities, exchange-traded funds (ETFs), and mutual funds. Performance data shown reflects a representative account for the model and is intended for illustrative purposes only. Individual account performance may differ materially due to factors including, but not limited to, the timing of contributions or withdrawals, tax treatment, fees, and other client-specific circumstances. Past performance is not indicative of future results. Investing involves risk, including the possible loss of principal.

Markets in Focus

Four stories are shaping markets right now:

• America has a new Federal Reserve Chair with a very different approach to rates.
• His policies are already shifting the outlook for jobs, housing, and GDP.
• Bonds and stocks are diverging in a way that creates real risk for investors.
• India is absorbing significant pain from the Middle East conflict, even as peace deal hopes have begun to lift its markets.

Meet Kevin Warsh, America’s New Central Banker

On May 22, 2026, Kevin Warsh was sworn in as the 17th Chair of the Federal Reserve, replacing Jerome Powell. The Senate confirmation came in at 54 to 45, the most divisive vote in Fed history.

Think of the Federal Reserve as the country’s master dial for the cost of borrowing. When the Fed raises rates, mortgages, car loans, and business loans all get more expensive. Every major asset class reacts to where that dial sits.

Warsh is widely described as a hawk, meaning he prioritizes keeping inflation low even if it requires higher rates and slower growth. He served on the Fed Board during the 2008 financial crisis and has spent recent years as a fellow at Stanford’s Hoover Institution. He is also the first Fed Chair to be openly pro-cryptocurrency.

The challenge he faces is immediate. Inflation came in at 3.8% year over year in April 2026, well above the Fed’s 2% target, driven partly by the Iran conflict pushing oil above $100 per barrel. Bond markets are pricing in a possible rate hike as soon as July, though 72% of participants still expect no change by year-end per CME FedWatch.

Warsh arrived with a White House mandate for lower rates, but rising inflation may force his hand in the opposite direction. And the market is already testing him to see how he will handle it, nothing like the entire world watching how you respond and carry yourself in the first month on the job.

What Warsh’s Fed Means for Growth, Jobs, and Housing

A new Fed Chair does not just affect Wall Street. Higher-for-longer interest rates ripple into jobs, housing, and the broader economy, and 2026 is already showing the strain.

GDP growth for 2026 has been revised down to 1.9%, well below the 2.5% to 3% pace of healthier years. Inflation at 3.8% and elevated energy costs are the main culprits, though AI-related capital spending is providing a partial offset.

On jobs, U.S. employers added an average of only 76,000 workers per month in early 2026, compared to roughly 200,000 per month in healthier years. Unemployment sits at 4.3% and is forecast to edge up to 4.6% by year-end per Federal Reserve projections. Economists describe the labor market as low-hire, low-fire: companies are not cutting aggressively, but they are not expanding either.

Housing is stuck in a painful holding pattern. Mortgage rates surged to the 6.58% to 6.75% range following Warsh’s confirmation. April housing starts fell 2.8% and mortgage applications dropped 2.3%. On a $400,000 home with 20% down, today’s rate means roughly $2,080 per month. Two years ago, at 5%, that same home cost about $1,720 per month, a difference of $360 every single month. Existing homeowners have little incentive to sell since listing means giving up their lower locked-in rate, keeping supply thin despite weaker demand.

Stocks Are Up, Bonds Are Down: Here Is Why That Matters

Over the past two months, the S&P 500 has climbed for eight straight weeks and is up roughly 8.6% since the Iran war began. At the same time, bond prices have been falling. The two asset classes are pulling in opposite directions.

Here is a simple explanation. Imagine you lent a friend $1,000 at 4% interest, collecting $40 per year. Now the going rate is 5.2%. Nobody will buy your old loan unless you discount it, because they can get 5.2% elsewhere. So, the price of your bond falls even though the payment has not changed. Yields up means prices are down. That is the fundamental rule of fixed income.

The 30-year U.S. Treasury yield has reached 5.2%, its highest level since 2007. The 10-year yield rose from 4.34% in late March to 4.56% as of May 22.

The stock market story is narrower than the headline suggests. A handful of AI and technology companies account for nearly all of the S&P 500 gains. The equal-weighted version of the index, which treats every company the same, rose less than 1% over the same period. Most stocks are barely moving.

This brings us to the concept of duration. Duration measures how long your money is locked into a bond and therefore how exposed you are to interest rate changes. A bond maturing in two years is a short duration. One maturing in 30 years is a long duration.

Short-duration bonds get hurt far less when rates rise, because you get your money back quickly and can reinvest at the new higher rate. For context: a 1% rise in rates costs a short-term T-bill only 1% to 2% in value, while a 30-year Treasury would lose 18% to 20%. Given that rates may continue rising under Warsh, staying shorter on the maturity curve is the prudent strategy today.

Why the Middle East Conflict Is an India Story Too

India is the world’s fifth-largest economy, home to 1.4 billion people. American companies including Apple, Google, and Amazon rely on India for manufacturing and sales. When India takes a hit, global supply chains feel it.

When the Strait of Hormuz closed on March 1, 2026, a narrow waterway between Iran and Oman through which about 20% of global oil flows, India was among the hardest-hit major economies. It imports 85% of its crude oil from the Middle East. For comparison, imagine if a conflict blocked all oil shipments from the Gulf of Mexico into the U.S. Gulf Coast refineries overnight. Gas prices would spike, electricity bills would climb, and every product on shelves would cost more because transportation gets more expensive. That is roughly India’s situation, except it has far less domestic energy production to fall back on.

The numbers are stark. India imports 91% of its cooking gas (the gas equivalent of propane, used by over 300 million households) from Gulf nations, and prices have spiked by the equivalent of a $20 overnight hike at the pump. Power grids and fertilizer plants run on Qatari Liquified Natural Gas and are now at just 70% of normal capacity. The Indian currency has weakened to 92 per U.S. dollar, making every dollar-denominated import more expensive.

May 25th, 2026, brought a genuine bright spot. The stock market jumped on signals that the U.S. and Iran may be nearing a peace agreement. A reopened Strait would ease India’s energy crisis almost immediately. Much of the downside is already priced in, and a genuine de-escalation would unlock meaningful upside for Indian equities.

The Big Picture

Four forces are converging. The playbook stays the same. Favor shorter-maturity bonds over long ones, stay selective in equities beyond the mega-cap AI names, and watch the Iran situation closely. We will continue monitoring and update you as events develop.

Another Disclaimer

Portus Wealth Advisors, LLC (“Portus”) is a registered investment adviser with the U.S. Securities and Exchange Commission (“SEC”). Registration with the SEC does not imply a certain level of skill or training and does not constitute endorsement by the SEC.

The information contained in this communication is for informational purposes only, is general in nature, and is not directed to any specific individual. It does not constitute investment advice, a recommendation, or an offer to buy or sell any security. Reading this communication does not create an advisory relationship with Portus.

The views and opinions expressed herein are those of Portus as of the date of publication and are subject to change without notice. Portus makes no representation that any opinion or projection will be realized. Information has been obtained from sources believed to be reliable; however, Portus does not warrant its accuracy, completeness, or timeliness.

Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific strategy will be profitable or suitable for an investor’s individual circumstances. Investors should consult their own tax, legal, and financial professionals before making investment decisions.