By Sinéad Carew and Devik Jain

NEW YORK, (Reuters) – Geopolitical concerns have added volatility to an already volatile market. Investors priced in the possibility that Russia and Ukraine would escalate. However, some were skeptical of the impact on asset prices for the United States over the long term.

According to news reports, tensions are rising between the two countries. This triggered a spike in Treasuries, dollar, and other safe haven assets prices on Friday. It also triggered a rally for Treasuries as investors, already rattled at the Federal Reserve’s hawkish turn, awoken by the possibility of a more severe conflict in Eastern Europe.

Michael Farr, Miller and Washington LLC stated that the market reacts because an invasion is not priced in yet. “The severity of an invasion, if one occurs, will correlate to the severity of the market’s reaction.”

Washington stated on Friday that Russia had enough troops in Ukraine for a major military invasion. The United States urged its citizens to evacuate the country in 48 hours, after Moscow intensified its opposition to Western diplomacy.

Jake Sullivan, White House National Security Advisor said that it was not clear whether Putin has given an order to invade and that he expects President Joe Biden will press for a call with Putin soon.

Even with Friday’s volatility, investors remain skeptical that a larger conflict might cause a slowdown in the wider markets.

Mark Luschini (chief investment strategist, Janney Montgomery Scott), stated that the market will likely react by selling to make it more obvious what invasion looks like. Then it will become clear what U.S. and European allies are going to do to it. “We don’t recommend making changes that are predicated upon the news cycle surrounding the topic.

Close to 1.9% was the benchmark’s closing price, while tech-heavy Nasdaq closed at 2.8%. This was due to Thursday’s weakness, which is a result of expectations that Fed officials will be more aggressive in fighting rising inflation. Cboe Volatility Index (also known as Wall Street fear gauge) was at its highest since January and went up for the second consecutive session.

The conflict is causing volatility, according to Thomas Hayes of Great Hill Capital LLC.

“We just have to see how this plays out over the weekend and whether or not international leadership can bring this under wraps,” he said.