Dhara Ranasinghe gives us a look at what lies ahead for the markets.

Andrew Bailey, Bank of England chief, apologizes for his “apocalyptic” view of the world. He said that inflation is at its highest point in over 25 years due to surging prices and the COVID lockdowns in China and Ukraine.

Federal Reserve Chief Jerome Powell warned that controlling inflation would “include pain” last week. Christine Lagarde, president of the European Central Bank will speak on Tuesday.

Markets are volatile because they can swing in any direction you want. This is due to the fear that high inflation could lead to rate hikes aggressively in the major economies.

The dollar is being lifted today as a strong hint by Australia’s central banks that a rate increase is imminent in June.

It’s the growing fear of a recession, exacerbated by Monday’s dark China data that is holding sway. These are almost 30% lower than the 3 1/2 year peak of just over a week.

Stock markets remain stable for now. But, U.S. Retail Sales and Industrial Production data, as well as the GDP numbers for the euro zone’s first quarter, will be a challenge to fragile sentiment.

Reuters polled economists to forecast that retail sales would rise 0.9% in April, compared with 0.5% a month ago.

Early Tuesday data showed that Britain’s unemployment rate was 3.7%, the lowest level since 1974. This could be a comfort for policymakers.

While sentiment remains largely safe, commodities prices are still on the rise. Wheat futures prices and prices for other agricultural products rose Monday. There are plenty of reasons to be anxious right now, it’s clear.

U.S. retail sales https://fingfx.thomsonreuters.com/gfx/mkt/dwvkryxdypm/Pasted%20image%201652306123735.png