Investing in a time of uncertainty

Sid Queler

May 24, 2022

Inflation, changing monetary policy and the war in Ukraine have heightened market volatility.

Inflation has been a top concern for investors throughout 2022. The Federal Reserve’s favorite inflation gauge, the Personal Consumption Expenditures Price Index, showed core consumer prices were up 5.2% year-over-year in January and continued to increase in February [1]

The Federal Reserve (Fed) began to address rising inflation by tightening monetary policy late in 2021. In March of 2022, it raised the federal funds target rate. Many investors, however, are concerned about the possibility of a Fed policy error. If the Fed’s actions are not thought to be aggressive enough to curb inflation, bond yields could rise sharply. On the other hand, if the Fed’s actions are considered too aggressive, it could make credit less available and lead the US economy into recession.

Russia’s invasion of Ukraine exacerbated inflation
Russia’s late February invasion of Ukraine made the inflation challenge more complicated. Both Russia and Ukraine are top commodity producers. Russia is a leading exporter of wheat, energy, and metals, while Ukraine is known as Europe’s breadbasket. One consequence is that the war has disrupted global commodity supplies, pushing prices higher.

Since the war began and sanctions were imposed, the price of crude oil has increased significantly. [2] The increase is reflected in the price of a gallon of regular gasoline in the United States. [3] The price of wheat was higher than normal before the war, due to poor harvests. Since the invasion wheat prices have increased 30%, [4] driving the cost of cereals and breads higher.

The invasion of Ukraine has created some uncertainty around the outlook for the United States economy. That did not deter the Fed, which began to normalize monetary policy by raising rates in March.

Financial markets and uncertainty
Inflation, changing monetary policy and geopolitical instability have created challenges for investors. The Fed is raising rates to battle inflation, which often increases financial market volatility. The historic picture for equity market performance during periods of inflation is mixed. When inflation is low but rising, equity markets have typically generated solid results and outperformed bonds. However, when inflation is high, equity market returns have not always kept pace with inflation. In the bond market, core fixed income returns have tended to suffer as interest rates rise. (Commodities, real estate, and gold are often used to hedge against inflation.)

Geopolitical instability has deepened market volatility and made taming inflation more difficult. The war in Ukraine is a serious event, and has potential to become even more critical. We are monitoring events closely, but we will not make “fearless forecasts” given the wide range of possibilities. We are evaluating events and the ways in which they affect key drivers of financial asset prices, including inflation, economic growth, monetary policies and market liquidity.

If you have questions or would like to discuss current conditions, contact me at or 617-531.6954.

Sid Queler is the chief growth officer, with more than 30 years of industry experience. In this role, he leads the firm’s business development team, setting strategies and practices that broaden relationships with individuals, families, foundations and endowments. Sid also shares economic and financial insights in his biweekly column, The Affluent Mind. 

1. Personal Income and Outlays, February 2022. (2022, March 31). Bureau of Economic Analysis. Retrieved April 4, 2022, from

2. Oil Price Charts. (2022, April 4). Retrieved April 4, 2022, from
3. Gasoline and Diesel Fuel Update. (2022, March 28). U.S. Energy Information Administration. Retrieved April 4, 2022, from

4. The Economist. (2022, March 12). War in Ukraine will cripple global food markets.