The new round of sanctions on Russia by the U.S. and its allies are likely to push Oil Prices, and inflation is even higher. This creates a more significant challenge for the Federal Reserve as it considers interest rate hikes and adds to tighter financial conditions in general. Economists see energy as a significant driver of inflation, but if Oil Prices get high enough, they also can choke the economy.
Stocks were volatile Monday. The S&P 500 ended the day at 4,373.94, off just 0.2%, while the Nasdaq Composite edged up 0.4% to 13,751.40. Investors turned to the Treasury market, pushing the 10-year yield to 1.8%. The dollar was off the highs it reached overnight trading, and gold was up about 1% as investors sought safer assets.
Moscow is one of the world’s largest energy producers, exporting about 5 million barrels a day. It is also a significant exporter of natural gas, accounting for more than a third of Europe’s supply. The U.S. Treasury announced a historic move against Russia’s central bank Monday, sanctioning a G-20 central bank for the first time.