19.05.202206:45 Forex Analysis & Reviews: Ukraine-Russia conflict, day 85. The situation in the Baltic States is heating up.

The key indices of the US stock market - Dow Jones, NASDAQ, and S&P 500 - ended Wednesday with a new powerful fall and are now again located near their local and annual lows. As we have said many times before, this is not surprising. Risky assets continue to fall, which is a global correction against the global uptrend that was observed before. Bitcoin is falling, cryptocurrencies are falling, stocks are falling, and indices are falling. The day before yesterday, Jerome Powell once again said that the Fed will do everything necessary to return inflation from 40-year highs to the target level of 2%. There is practically no doubt that the key rate will rise over the next 8-12 months to a value of 2.5-3.5%. In any case, this is a strong increase, even if the Fed stops at 2.5%. Also this week, several members of the Fed monetary committee spoke, who also confirmed that the rate will rise and the Fed's balance sheet will shrink, so there is simply no other way for the US stock market except down.

The geopolitics of the situation remains extremely tense. If a month ago the whole world was closely following the situation in Ukraine, now attention is slowly beginning to shift towards Finland and Sweden, as well as the Baltic States and Poland. The fact is that Finland and Sweden have applied to join NATO. Moscow has already said that Russia will respond to this attempt to expand NATO to the East and this response will be military. It is not entirely clear what is meant: whether strengthening the border with Finland, the length of which is more than 1000 km, or preparing for a new "special operation". One way or another, relations between NATO and the Russian Federation continue to deteriorate. And any direct collision of such two "monsters" can lead to such consequences, against which the military conflict in Ukraine and the coronavirus pandemic will seem like a game of war in the yard and a runny nose. The Baltic states fear that Russia may try to cut through a land corridor to the Kaliningrad region, which may well be blockaded due to the sanctions imposed against Russia by the whole of Europe. And Poland, which provides the greatest support to Ukraine and openly adheres to "anti-Russian" rhetoric, may fall under "denazification". In general, one thing is for sure: the countries of Lithuania, Latvia, Estonia, Finland, Sweden, and Poland are frankly worried that the Kremlin may order troops to enter their territories. In this regard, there is a process of increasing NATO's military presence in these countries, as well as the expansion of the military bloc itself further to the East of the Eurasian continent, which Moscow just wanted to avoid by launching a "special operation" in Ukraine. By the way, NATO Secretary-General Jens Stoltenberg once again stated that Turkey's position would not be an obstacle to the accession of Finland and Sweden. Negotiations will be held and consensus will be reached.