In the upcoming week, markets may experience volatility due to the Federal Reserve's rate discussion and the ongoing tensions in Ukraine.

• In the week ahead, central bank rate hikes this year will likely be the focus of debates among investors, who will look to Federal Reserve officials for guidance.
• The markets may remain affected by worries about the Russia-Ukraine conflict.
• On Monday morning, St. Louis Fed President James Bullard will discuss his surprising call for the fed funds rate to be raised by 100 basis points, or 1 percentage point, by July on CNBC's "Squawk Box."
• Producer price inflation data Tuesday and Fed minutes Wednesday will be important releases.

The week ahead may see volatile stock markets as investors monitor the escalating tensions between Russia and Ukraine and discuss the pace at which the Federal Reserve can increase interest rates.

The past week saw markets being turbulent and bond yields increasing after an unexpectedly high inflation reading on Thursday disrupted many Wall Street predictions for interest rate hikes. On Friday, investors received another blow when the White House warned that Russia might invade Ukraine during the Olympics. Both the U.S. and U.K. have urged their citizens to evacuate Ukraine as soon as possible.

Peter Boockvar, chief investment officer at Bleakley Advisory Group, stated that the Fed is keeping everyone on edge, and this will increase their edginess. He added that the three-week earnings respite from the macro ended, and they turned their focus to micro issues. However, this week they were reminded that earnings season is almost over, and all macro issues matter again.

On Friday afternoon, the major averages experienced a sharp decline, while Treasury yields fell from their highs set after the report that January's consumer price index increased by 7.5%, a 40-year record. The S&P 500 lost 1.8% for the week, ending at 4,418.

Jake Sullivan, the U.S. National Security Advisor, informed a White House briefing that there were indications of Russian escalation at the Ukraine border with only two hours remaining until Friday trading. Despite previous speculation suggesting an invasion would not happen during the Olympics, Sullivan stated it was still a possibility.

Marc Chandler, chief market strategist at Bannockburn Global Forex, stated that until now, the focus has been on monetary policy. However, the recent developments have added an extra layer of uncertainty. The dollar has strengthened, oil prices have increased, and stocks have fallen. Even if nothing happens this weekend, people will be anxious about the situation in the following week.

The Russian tensions are making it harder for the central bank to predict the future, and an invasion would only make the already high global inflation worse. Boockvar explained that this would make it more difficult for the Fed to control inflation, as it would increase the prices of oil, food, wheat, and fertilizers. He emphasized that the Fed cannot back off from raising interest rates, as geopolitical factors should not be used as an excuse.

If the central bank were concerned about the economic impact, it could slow hikes.

Fed’s inflation fight

Some economists have raised their expectations for the Fed to hike interest rates by a half point in March, while others, including those at Goldman Sachs, have predicted a faster pace, with up to seven quarter-point hikes this year.

In the upcoming week, St. Louis Fed President James Bullard will be a featured speaker, appearing on CNBC's "Squawk Box" on Monday at 8:30 a.m. Bullard's comments on Thursday, which included a desire to see interest rates rise by 100 basis points (or 1 percentage point) by July, contributed to market turbulence and the sharp increase in bond yields.

Patrick Palfrey, senior equity strategist at Credit Suisse, stated that he believes volatility will remain high as we transition from a more dovish to a more hawkish Fed policy. He explained that until the Fed can establish a consistent path for interest rate hikes, volatility will persist, particularly for high valuation companies.

What to watch

The Fed releases its meeting minutes on Wednesday, which investors will closely monitor for any updates on rate hikes, inflation expectations, and balance sheet comments.

The producer price index, which is expected to be very hot after January's CPI, will provide more important inflation data on Tuesday. Surging inflation has caused consumer sentiment to slump, and now economists are closely watching consumer spending. January's retail sales will also be important when it is reported on Wednesday.

The final rush of big earnings reports is on Wednesday, Thursday, and Friday.

Palfrey stated, "As we move beyond earnings, investors were comforted by the maintenance of high profit margins. Now, the question is whether we can continue to pass through prices at the same rate in the upcoming quarters."

Fed debate

Palfrey stated that investors are seeking clearer communications from the central bank. Bullard is the only Fed official who supports a 50-basis-point hike, while others, such as Cleveland Fed President Loretta Mester, expect to increase the fed funds target rate by no more than a quarter point. Fed Chairman Jerome Powell has left the possibility of a half-point hike open but has not expressed his preference for it.

On Thursday, Fed Governor Lael Brainard speaks, followed by Fed Governor Christopher Waller on Friday.

Although other Fed officials have disagreed with Bullard's remarks, there remains uncertainty in the market, and bond experts are questioning whether the St. Louis Fed chief will revise his comments on Monday.

Some investors question whether market volatility may impede the central bank's tightening course, as stated by Liz Ann Sonders, the chief investment strategist at Charles Schwab.

"The Fed is continuing to add to its balance sheet and maintain zero interest rates, as there is nothing in my mind that would change their stance unless an asteroid hits Earth and destroys us all," she said.

"They admitted that they are behind the curve. They unintentionally revealed the inflation issue. I believe they underestimated its impact," she stated.

Rate rally and reverse

As the bonds sell off, yields increase and they reached a high of 2.06% on Friday. Following the Ukraine news, the 10-year yield decreased to approximately 1.93%.

On Friday, the 2-year yield reached a high of 1.63%, up from 1.32% the previous week. The largest fluctuations occurred on Thursday, with the yield on the note moving more than 20 basis points. However, by Friday afternoon, it had decreased to 1.51%.

Week ahead calendar

Monday

Earnings: , Vornado Realty, , BHP Group, Brookdale Senior Living

8:30 a.m. St. Louis Fed President James Bullard on CNBC’s Squawk Box

Tuesday

Wynn Resorts, Akamai, Lattice Semiconductor, Adaptive Biotech, Denny's, ZoomInfo, Wyndham Hotels, Upstart Holdings, Zoetis, earned impressive profits.

8:30 a.m. PPI

8:30 a.m. Empire State manufacturing

2:00 p.m. TIC data

Wednesday

TripAdvisor, DoorDash, Hilton Worldwide, Pioneer Natural Resources, Marathon Oil, Generac, Analog Devices, Vulcan Materials, Community Health, Ryder System, earnings.

8:30 a.m. Retail sales

8:30 a.m. Import prices

8:30 a.m. Business leaders survey

9:15 a.m. Industrial production

10:00 a.m. Business inventories

10:00 a.m. NAHB survey

2:00 p.m. Fed meeting minutes

Thursday

Airbus, Nestle, Dropbox, Roku, Tanger Factory Outlet, Visteon, US Foods, Yamana Gold, Liberty Global, Southern Co, Reliance Steel, Sealed Air, Realogy are some of the companies that have reported earnings.

8:30 a.m. Initial jobless claims

8:30 a.m. Housing starts

8:30 a.m. Philadelphia Fed manufacturing

11:00 a.m. St. Louis Fed’s Bullard

5:00 p.m. Cleveland Fed President Loretta Mester

Friday

Earnings: Allianz, Bloomin’ Brands,

10:00 a.m. Existing home sales

10:00 a.m. QSS

At the U.S. Monetary Policy forum, Christopher Waller, the Fed Governor, and Charles Evans, the Chicago Fed President, were present.

11:00 a.m. New York Fed President John Williams

1:30 p.m. Fed Governor Lael Brainard at U.S. Monetary Policy forum