The Russian invasion into Ukraine and resulting Western sanctions on Russia continue to impact financial markets and the global economic outlook. As a result of the sanctions, inflationary pressures have increased, particularly in energy, metals, and agricultural commodities like wheat. Elevated inflation data is setting the stage for further rate hikes by the Federal Reserve (Fed) this year. The Fed is likely to continue to tighten monetary policy this year but has little margin for error to achieve a soft landing for the economy as it attempts to combat inflation without pushing the economy into a recession. We believe a strong labor market and consumer spending will continue to provide tailwinds to the economy; however, a prolonged conflict in Eastern Europe, elevated commodity prices, and tighter monetary policy present risks to economic growth. We expect financial market volatility to remain elevated and conditions to tighten as the Fed transitions to a less accommodative monetary policy.