The data on British inflation has caused serious concerns in the markets about the prospect of a renewed acceleration of inflation worldwide. The core inflation (which excludes volatile goods) jumped from 6.2% to 6.8% in April. It was expected that the pace of price growth would remain unchanged.

In just one month, the price level rose by 1.2%. Let me remind you that central banks in developed countries try to keep price growth at around 2% per year. In the UK, more than half of the annual norm was reached within a month.

Inflation in developed countries, especially in open economies, tends to quickly spread to other countries. In other words, the rise in price levels is more or less synchronous. Therefore, financial markets hurried to factor in a higher chance of aggressive measures from the central banks of leading economies into prices, resulting in the start of a correction. Bears dominated the American session yesterday, and today the decline continues in major European markets and US index futures. The dollar and gold are rising, as the best way to weather the storm in financial markets is to temporarily give up the search for yield. The flight-to-safety factor outweighed the factor of rising alternative costs in gold quotes, thus strengthening the asset. In the bond market, the capital outflow from stocks to bonds outweighed the factor of aggressive central banks. Yields are moderately decreasing after a seven-day rally.

Currencies sensitive to expectations of an expansion phase in the global business cycle, such as the AUD and NZD, were hit hard, declining by 0.5% and 1.8% respectively.

Oil prices are trying to hold steady as rumors grow that OPEC+ will decide to voluntarily cut production again. Currently, considering the absence of significant competition from shale oil, it is reasonable to expect that the alliance will be inclined to exercise price control by selling less but at higher prices. Of course, there is also an element of forecasting future demand growth, which can also affect sentiment in the risk asset markets.

The acceleration of inflation in the UK fits well with the picture where Fed officials have recently started hastily preparing the markets for a higher interest rate this year. There is a high probability that, given the synchronous inflation growth, a similar dynamic can be expected in the United States.

During the correction, the S&P 500 index declined into the range of a two-month consolidation, where both investors and speculators with short positions were indecisive:

Considering the growing concerns about a renewed acceleration of inflation and the counter-reaction of central banks, the intensity of which could prematurely disrupt the expansion phase of the economy, risks are shifting in favor of breakthrough downward movements. The immediate attractive target for sellers appears to be the 50-day moving average, which is in the range of 4110-4115 points. The release of the Federal Reserve meeting minutes, scheduled for today, could act as a catalyst for the movement.