How can you dampen inflation while not limiting growth? It’s a difficult job for central banks. We will also see the impact of China’s COVID lockdowns on trade as other countries grapple with high prices.

And another complication — M&A deals worth over $400 billion are waiting for financing, but costs are rising fast.

This is the week ahead for markets: Lewis Krauskopf, Tom Westbrook, Andres Gonzalez in Madrid, Karin Strohecker, and Tom Westbrook, New York.

1. NAME OF THE GAMES

Inflation is igniting central bankers’ sense of urgency. Australia hiked more than was expected, and the Fed announced its largest rate increase in 22 years. India made an unanticipated move.

However, this policy tightening rush adds to the turmoil over the world’s economy. This is due to soaring energy and food prices as well as war in Ukraine. While the Bank of England raised rates, it also warned of recession risk.

The tightrope that central banks walk will be highlighted by Germany’s ZEW sentiment indicator and Q1 UK GDP preliminary data. In emerging markets, Mexico and Peru will confirm the rate rise cycle.

Rate hikes cycle is underway https://fingfx.thomsonreuters.com/gfx/mkt/myvmnyydgpr/Rates.PNG

2/INFLATION STATIONS

After the biggest surge in inflation for over 40 years, is U.S. inflation at its peak? This Wednesday’s release of the April consumer price indicator will reveal.

CPI was 8.5% in March on an anualized basis. Record high gasoline prices led to the increase. CPI increased 1.2% monthly, which is the highest increase since September 2005.

According to early estimates, there will be a 0.2% increase in monthly inflation.

Most likely, the Fed will increase its 50-basis point rate by May 4 because of March’s inflation spike. Expectations regarding how the Fed will adjust its monetary policy moving forward could be influenced by the upcoming inflation print.

U.S. consumer price inflation https://fingfx.thomsonreuters.com/gfx/mkt/zdpxoggrgvx/Pasted%20image%201651677937685.png

3/SPRING BREAKDOWN

China’s anti COVID lockdowns are a clear indication that the spring is coming. In addition to the immense strain it places on the lives of tens and millions of people worldwide, the damage to the global economic outlook is enormous.

The markets are tired of the limited support from policymakers. The recent downturn in economic activity will have a negative impact on trade data Monday. This could lead to further declines in world growth.

Prices, iron ore and oil are all already in decline. The slowdown comes amid a strong U.S. hike cycle and is threatening to derail foreign investors who are putting their money into local markets.

Lockdowns hit the brakes on China’s growth https://fingfx.thomsonreuters.com/gfx/mkt/lgvdwggrypo/Pasted%20image%201651752855133.png

4/ OIL & PRIDE

For the European Union, banning Russian oil imports appears to be a matter not of if but of when. According to the top diplomat of the bloc, they are close to agreeing their sixth most severe package against Moscow in regard to Ukraine’s invasion.

A phased embargo against Russian oil which accounts for more than 25% of EU imports is the centerpiece of this package. This will force European oil refineries to race for new suppliers, and it will leave motorists with higher fuel bills.

Russia will also hold its annual May 9 Victory Day celebration in Moscow, to celebrate the anniversary of Soviet Union’s victory over Nazi Germany. The Kremlin denied that Vladimir Putin intended to declare war on Ukraine, and called for a national mobilization during this highly symbolic event.

World’s top oil producers https://fingfx.thomsonreuters.com/gfx/mkt/znpnemoozvl/Global%20oil%20producers.PNG

5/WAITING TO MAKE MONEY

The global market is beginning to rebound after the first quarter slump that was caused by Russia’s invasion of Ukraine.

April M&A rose 30% from March to $387 billion, and included mega deals such as Elon Musk’s $44 billion buyout of Twitter (NYSE:) and a 58 billion-euro ($61.04 billion) bid by a consortium for Italian airport and motorway operator Atlantia.

Now the M&A market faces another challenge – funding.

According to Refinitiv data, there have been more than 400 billion deals announced worldwide since January, but none of them were completed.

M&A deals typically include ‘staple financing’, a pre-arranged package offered to potential purchasers to finance the acquisition. After the agreement is reached, the buyer may invite other banks to participate in the syndicated financing. You can tap into the equity or bond markets.

Since the agreements were reached, however, financing costs have increased dramatically. The average global corporate bond yields rose 100 basis points and 150 bps since February 24, according to ICE (NYSE:). BofA indexes.

This has left many deals unfinished. These deals include Microsoft (NASDAQ)’s purchase Activision Blizzard(NASDAQ:), Musk’s Twitter acquisition, and Macquarie and British Columbia Investment Management’s investments into Britain’s. National Grid (LON:).

Top 10 pending M&A deals globally ($ bln) https://graphics.reuters.com/GLOBAL-MARKETS/FIVE/lbpgnydjdvq/chart.png