What Rising Energy Prices, Market Mistakes, and Bond Volatility Mean for You

Markets are shifting as energy prices rise, interest rates increase, and hidden risks emerge. Learn what’s driving these changes and how to stay focused on long-term investing decisions to help you protect and grow your wealth in a changing environment.

Last Edited by: LPL Research

Last Updated: May 21, 2026

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IN THIS ARTICLE:

A few big forces are moving markets lately. You may have noticed higher gas prices, more market swings, and news about rising interest rates. Here’s what’s going on and what it means for your money.

Energy Prices Are Rising, But the Economy is Holding Up

The conflict in the Middle East and effective closure of the Strait of Hormuz has made it harder to move oil and led to disruptions in shipping and supply chains. This has pushed energy prices higher, which then raises costs to move other goods, increasing various everyday costs.

The important takeaway is higher energy prices tend to affect inflation more than overall economic growth. Estimates suggest growth could dip slightly in the near term, but not enough to stop the economy from expanding.

That balance matters because rising costs can squeeze budgets and company profits, but the U.S. economy today is more resilient than in past decades. It uses energy more efficiently and produces more of its own supply, which reduces the impact of oil shocks.

For investors, this means markets may react to inflation concerns even if the overall economy stays relatively stable.

Why Most Portfolio Manager Mistakes Seem Smart at the Time

One of the hardest parts of investing is that many portfolio manager mistakes often don’t appear reckless at first. A portfolio manager is the person responsible for choosing and managing the investments in a fund or strategy on your behalf—deciding what to buy, sell, or hold to help grow your money over time. Strong past performance, a compelling story, and early success can all reinforce confidence.

The challenge is that many risks seem smart at the time, and early warning signs of these risks do not immediately show up in returns. Instead, they appear in changes behind the scenes, such as shifts in strategy, growing assets that change how a fund is managed, or taking on risks that do not seem dangerous individually.

By the time results start to slip, the risk has already developed.

A primary difference between institutional manager research and individual selection is the questions being asked. High-quality manager research focuses beyond past success and optimism to future durability and probability.

For client portfolios, this may translate to fewer surprises, performance that may align with expectations, and more consistency across different market environments.

Why Bond Markets Are Suddenly Getting Attention

Global bond markets faced a sharp rise in yields, or the interest rates bonds pay, have been rising across major economies at the end of last week.

Bond markets are global in nature, and when rates spike in one market, this can spill over into other markets across borders, as we saw last week. From a high level, this was driven by a broader concern about owning longer dated bonds, as well as some inflation-related worries.

Another factor is something called the term premium. This is the extra return investors require for tying up money for a longer period, which can rise when uncertainty is high.

Rising yields can create short-term pressure on both stocks and bonds, but they may offer future return opportunities for long-term investors.

What This Means for Your Investments

All together, these trends tell a clear story. The market is adjusting to higher costs and uncertainty around the globe, not breaking down.

  • Energy-driven inflation may stay elevated even with steady growth
  • Investment mistakes often come from small overlooked risks, not bad intentions
  • Rising bond yields reflect higher uncertainty, but also create new opportunities

Staying diversified and focusing on long-term goals remains critical in this environment.

 

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INFLATION, INBTEREST RATES, AND INVESTMENT RATE FAQS

Higher energy prices can affect your investments, but not always in the way people expect. When oil and gas prices rise, companies and consumers often face higher costs,which can push overall prices higher across the economy.

 

However, the economy does not necessarily slow down sharply because of this. Right now, expectations point to only a modest impact on growth, and an economy that continues to move forward, just at a slightly slower pace.

 

For your investments, this means markets may feel more volatile in the short term as investors react to rising costs. But it does not automatically signal a downturn. Some sectors may struggle while others may benefit. The key is to stay diversified rather than reacting to one headline.

Investments usually struggle because conditions and risks change over time, not because the original decision was careless. An investment might perform well for years, backed by strong results and a solid story. That early success can build confidence and make the investment feel safe.

 

The challenge is that risks often develop quietly and these issues rarely show up right away in performance. By the time returns start to weaken, the underlying problem has often been building for a while. 

Interest rates have recently moved higher, with the average 30-year mortgage climbing to around 6.5%, driven by a mix of persistent inflation and rising energy and gas prices that are keeping everyday costs elevated.



Global tensions, particularly in the Middle East, have added to concerns by disrupting oil supply and raising fears that inflation could stay higher for longer. Because of this, the Federal Reserve has held rates steady instead of cutting them, which has also contributed to rates staying elevated across the broader market.

Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change. ​

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results. ​

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. ​

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy. ​

All investing involves risk, including possible loss of principal. ​

US Treasuries may be considered “safe haven” investments but do carry some degree of risk including interest rate, credit, and market risk. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. ​

The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The PE ratio (price-to-earnings ratio) is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. It is a financial ratio used for valuation: a higher PE ratio means that investors are paying more for each unit of net income, so the stock is more expensive compared to one with lower PE ratio. ​

Earnings per share (EPS) is the portion of a company’s profit allocated to each outstanding share of common stock. EPS serves as an indicator of a company’s profitability. Earnings per share is generally considered to be the single most important variable in determining a share’s price. It is also a major component used to calculate the price-to-earnings valuation ratio. ​

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings in commodities will result in significant volatility in an investor’s holdings. Commodities include increased risks, such as political, economic, and currency instability, and may not be suitable for all investors.​

The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. Indexes are unmanaged and cannot be invested in directly.

The MSCI US Broad Market Index captures broad U.S. equity coverage. The index includes 3,204 constituents across large, mid, small and micro capitalizations, about 99% of the U.S. equity universe. Indexes are unmanaged and cannot be invested in directly.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. Private credit carries certain risks — illiquidity, opacity, borrower concentration, and bespoke structures — that distinguish it from corporate bonds and bank loans and complicate its evaluation and oversight.

All index data from FactSet or Bloomberg.

This research material has been prepared by LPL Financial LLC.

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