General Market Review
Global equity markets faced significantly harsher conditions in March, as escalating geopolitical turmoil most notably the continued U.S. Israel-Iran conflict triggered a broad risk-off shift across global assets. The S&P 500 fell approximately 5%, marking its worst month since 2022. Meanwhile, global indices also sold off sharply. Europe and Asia registered some of the steepest losses, reversing early year gains as investors weighed the economic implications of elevated oil prices and vulnerable trade routes.
Emerging markets experienced a particularly pronounced sell‑off, falling around 13%, partly due to their exposure to energy import reliance and geopolitical sensitivity.
The principal driver of market stress remained the effective closure of the Strait of Hormuz, which amplified fears of prolonged disruption to global energy flows and sustained cost pressures.
The U.S. macroeconomic picture was mixed in March. Labor market conditions weakened, with non-farm payrolls showing a loss of -92k jobs and unemployment rising to 4.4%.
Inflation remained steady: U.S. headline CPI held around 2.4% year‑on‑year, consistent with February readings and suggesting that broader price pressures had not yet incorporated the full effect of late‑March energy spikes.
Consumer sentiment and corporate activity were shaped heavily by rising energy costs and uncertainty regarding the duration of Middle East hostilities.
The Federal Reserve did not change policy in March, maintaining the federal funds target range at 3.50–3.75%. Market expectations for 2026 rate cuts declined throughout the month as energy‑driven inflation risks rose.
Yields on 10‑year U.S. Treasuries rose by 38 basis points, from 3.94% to 4,32%, while 10‑year German Bund yields rose by 36 basis points, from 2.64% to 3,0.
The MSCI World Index fell by -6.4% in USD terms, and the MSCI Europe Index fell by -7.7% in EUR terms.
Portfolio Management Report
Brent crude prices surged sharply in March, marking the strongest monthly increase in decades as the United States and Israel engaged in a multi‑week conflict with Iran. In response, Iran closed the Strait of Hormuz, pushing Brent crude from USD 72.50 to USD 118.35 per barrel by the end of the month. Retaliatory actions by Iran resulted in damage to more than 70 energy facilities across the Gulf region. Approximately 17% of Qatar’s LNG capacity has been destroyed, and rebuilding the damaged infrastructure is expected to take between three and five years.
Credit spreads widened overall in March, although the spillover from equity market weakness remained relatively contained. U.S. high‑yield spreads rose by 26 bps, while European high‑yield spreads widened by 53 bps. The sharp increase in energy prices also reignited inflation concerns, pushing interest rate futures higher.
In the Nordic high‑yield bond market, March generated sub‑par performance, with the Nordic index declining -0.4% for the month and reducing year‑to‑date gains to +1.5%. The U.S. high‑yield bond market fell -1.18% in March, bringing its year‑to‑date performance to -0.5%. The European high‑yield market performed even worse, with a month‑to‑date loss of -2.47%, leaving it down -1.5% year‑to‑date.
The most resilient sector within high yield was the energy segment. U.S. high‑yield energy bonds slipped only -0.12% during the month and remained up +2.5% at the end of March.
The Seahawk Credit Opportunities Fund held up comparatively well in March, supported by its 15.8% exposure to exploration and production and 24.9% to oilfield services—two of the most resilient segments in the high‑yield universe during the period. The EUR‑S and USD‑S share classes declined -0.89% and -0.77% month‑to‑date, respectively. Year‑to‑date, however, both classes remained positive at +0.08% and +0.46%, significantly outperforming both the U.S. and European broad high‑yield markets.
As geopolitical tensions escalated in the Middle East and risk premia rose particularly strongly in the airline high‑yield segment, the fund increased its exposure to the European airline sector. Additional positions were added in subordinated bonds of Air France‑KLM, offering a yield‑to‑worst of 5.25%, as well as in subordinated Lufthansa bonds with a yield‑to‑worst of 4.89%.
For more information, you can find our latest Factsheet – March 2026.
Seahawk Investments GmbH
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