Financial markets are experiencing heightened volatility and tighter conditions as central banks employ more restrictive monetary policies to combat persistent inflation. Risk assets have sold off and bond returns have been negatively impacted by the dramatic rise in rates. The conflict between Russia and Ukraine has exacerbated inflationary pressures, particularly with energy and commodities, and shows no sign of abating in the short run. Additionally, strict COVID lockdowns in China are intensifying distressed supply chains. Although labor markets and consumer spending remain strong, we believe the risk of an economic slowdown later this year is increasing. Although we expect the Fed to continue to tighten monetary policy, the FOMC has very little margin for error as it attempts to combat inflation without pushing the economy into a recession. Over the near-term, we expect financial market volatility to remain intensified and conditions to remain tighter with persistent inflation, geopolitical risk, supply chain bottlenecks, and the Fed’s shift to a more hawkish monetary policy.