The major market indexes have been under pressure of late due to investors’ concerns over surging inflation, increasing sanctions on Russia, rising energy prices, supply disruptions, and prospective aggressive interest rate increases by the Federal Reserve this year to tame inflation. Market volatility is expected to linger in the absence of signs that persistent issues are easing. Crude oil prices have remained consistently above $100 per barrel, and further supply disruptions may propel them to newer highs. Recessionary conditions have historically followed higher crude oil prices. Earlier this week, natural gas prices climbed to 13-year highs.
The March CPI data revealed an 8.5% increase year-over-year, representing the highest inflation since December 1981. In addition, the March jobs data suggested a tight labor market. According to Goldman Sachs, the odds of economic contraction stand at 35% over the next two years.
