February 28, 2025
Why this week matters for banking interviews
If you’re preparing for investment banking recruiting, this is the kind of market backdrop you should be able to summarize without sounding like you memorized headlines. The clean theme is simple: inflation is still complicating central bank decisions, tariff uncertainty is showing up in multiple sectors, and scale is driving corporate strategy across payments, airlines, banking, and asset management.
That gives you several strong ways to answer “What’s happening in the markets?” You don’t need to recite every index level, but the setup helps. As of February 26, the S&P 500 sat at 5,956.06, the Dow at 43,433.12, the Nasdaq at 19,075.26, the Russell 2000 at 2,174.17, the FTSE 100 at 8,731.46, and the Nikkei 225 at 38,142.37. WTI crude was at $68.81, while the 10-year Treasury yield was 4.478%.
For interviews, I’d frame the week around three questions: Are rate cuts getting harder to justify? Are tariffs starting to hit corporate planning? And where are companies using M&A, restructuring, or product scale to protect growth?
Sticky inflation is making central banks more careful
The U.K. inflation print is the best macro example. Annual inflation rose to 3.0%, up from 2.5% in December and above the Bank of England’s 2.0% target. It also came in above economist expectations of 2.8%. That matters because the Bank of England had already cut interest rates to 4.5% and emphasized a “gradual and careful” path for further cuts.
This is a classic interview-ready tension: weak growth argues for easier monetary policy, but sticky inflation limits how fast the central bank can move. The situation gets more complicated because wage growth and energy costs could push U.K. inflation to 3.7% by the end of the summer. If you’re asked about monetary policy, don’t just say “inflation is high.” Say that central banks are trying to balance slower growth against inflation that’s still above target.
The same issue is visible in the U.S. The Federal Reserve held interest rates at 4.25% to 4.5% during its January meeting, and the minutes showed that cuts may remain unlikely in the near term. Officials still expect to lower borrowing costs eventually, but slow progress on inflation and uncertainty around economic policy are keeping them cautious.
Tariffs are part of the inflation discussion. Fed officials cited tariffs on China, Canada, and Mexico, along with mass deportation policies, as potential inflationary risks. Some policymakers view tariff-driven price increases as temporary, while others worry they could persist. That distinction is worth remembering because interviewers like to test whether you understand second-order effects. A tariff isn’t only a trade policy headline; it can feed into prices, margins, demand, and interest rate expectations.
Interview framing: “The market is still waiting for rate cuts, but central banks need more evidence that inflation is moving sustainably lower. Tariff uncertainty makes that harder because it can raise input costs and delay disinflation.”
Tariffs are already affecting currencies, housing, and management expectations
Tariff uncertainty isn’t staying in one corner of the market. Recent after-hours policy statements around 25% aluminum and steel tariffs on China increased demand and liquidity in Asian FX markets. The USD/CNH offshore renminbi pair has become the second-most traded currency futures contract in recent months, behind USD/EUR. Daily volume in USD/CNH on the Singapore exchange reached $16 billion in the second half of 2024, up more than 50% from 2023. USD/INR daily volume also rose 46% to $1.9 billion.
That’s a useful point because it connects politics to market structure. Traders aren’t just debating tariffs in theory; they’re adjusting FX positions quickly, including in overnight Asian trading. Analysts also warned that uncertainty around U.S. trade policy will continue to weigh on U.S. and Asian currency rates, especially given trade surpluses in major Asian economies.
Housing gives you another practical example. Single-family homebuilder sentiment fell to a five-month low in February. The NAHB Housing Market Index dropped five points to 42, below the 50 level that indicates negative sentiment. Sales conditions fell to 46, buyer traffic declined to 29, and sales expectations for the next six months dropped 13 points to 46.
Builders are dealing with mortgage rates above 7%, rising home prices, and tariff-related cost concerns. After tariffs on Canada and Mexico were announced and then delayed, builders expected higher costs, with 32% of appliances and 30% of lumber coming from abroad. That matters for banking because homebuilding touches rates, consumer affordability, materials costs, and credit conditions all at once.
Consumers are showing signs of strain
U.S. retail sales fell 0.9% in January, the sharpest decline in nearly two years and much worse than the expected 0.1% decrease. Severe winter weather, California wildfires, and a post-holiday pullback all contributed. Auto sales fell 3%, and online retail transactions declined almost 2%.
One bad month doesn’t prove the consumer is breaking. Many economists still point to the strong job market and other positive indicators as reasons for cautious optimism. But for interviews, the important point is that consumer strength is no longer something you can take for granted. Retailers are adjusting expectations, and Walmart projected lower-than-expected sales and profits for the current fiscal year because inflation concerns could reduce consumer spending. Its share price fell 6% after the announcement.
If you’re discussing GDP, this is where you can sound more thoughtful. Retail sales weakness could pressure first-quarter growth, but the durability of the labor market may limit the downside. That’s a better answer than a one-line “consumer spending is weak.”
Shift4’s Global Blue acquisition is a strong payments M&A case study
The cleanest M&A story is Shift4 Payments agreeing to acquire Global Blue Group in a $1.5 billion deal. Global Blue is a Switzerland-based tax-free shopping network that helps international shoppers reclaim VAT on purchases. The transaction values Global Blue at about $2.5 billion including debt and represents a 15% premium to its recent share price.
This deal gives you plenty to discuss in an IB interview. Strategically, Shift4 already processes more than $250 billion annually across hospitality, retail, entertainment, and travel. Global Blue brings relationships with major retailers including Prada, Nike, and IKEA. The logic is cross-border payments, international shoppers, and multi-currency transactions.
That’s a more interesting answer than “payments company buys another company.” The better explanation is that Shift4 is expanding from payment processing into a broader international commerce ecosystem. Tax-free shopping is connected to travel retail, luxury spend, and cross-border consumer flows. Global Blue also gives Shift4 a deeper position with global retailers.
The leadership angle is also relevant. Taylor Lauber, Shift4’s president, said the deal would help serve international shoppers, particularly in multi-currency transactions. Shift4 CEO Jared Isaacman is expected to step down, with Lauber positioned to take over. Global Blue investors including Ant Group and Tencent plan to retain stakes in the combined company and explore strategic partnerships.
Companies are restructuring around costs and scale
Southwest Airlines announced layoffs of 1,750 employees, the first broad layoff in its 53-year history. The cuts target corporate roles, affecting 15% of corporate staff and 11 senior leaders. CEO Bob Jordan called the move “unprecedented,” with layoffs expected to be completed by June.
The background is pressure from Elliott Management, which acquired a 10% stake and criticized the airline’s cost control and profit margins. Southwest has also outlined a three-year plan that includes removing its seat-yourself policy, adding seats with more legroom, and introducing red-eye flights. The layoffs are expected to save about $210 million this year and $300 million next year, excluding $60 million to $80 million in severance and benefits.
For finance students, this is an activist pressure and margin improvement story. It also shows how even a historically profitable company can be pushed to rethink its operating model when costs and shareholder expectations collide.
HSBC offers a different version of the scale and efficiency theme. The bank reported a 6.5% increase in annual pre-tax profit to $32.31 billion, slightly below LSEG estimates of $32.63 billion but above internal consensus of $31.67 billion. Revenue was $65.85 billion, slightly below the prior year’s $66.1 billion. HSBC also announced a share buyback of up to $2 billion, expected to be completed by the end of the first quarter of 2025.
At the same time, HSBC is cutting costs, targeting $1.5 billion of expense reductions by the end of 2026. CEO Georges Elhedery is leading a restructuring that divides global operations into “Eastern” and “Western” markets. The bank also recently laid off around 40 investment bankers in Hong Kong, primarily in M&A, consumer, real estate, and energy.
VOO overtaking SPY is a simple but powerful asset management story
Vanguard’s VOO became the world’s largest ETF, with $631.8 billion in assets, edging out State Street’s SPY at $630.3 billion. The reason is easy to explain: investors are favoring low-cost, long-term ETF products. VOO charges a 0.03% annual fee, compared with SPY’s 0.0945% fee. VOO has attracted $23 billion of inflows this year, while SPY has lost $16 billion.
SPY still matters for active traders because of liquidity and derivative options. But VOO’s rise shows the broader shift from active to passive investing and from higher-fee products to lower-cost index exposure. The U.S. ETF market recently surpassed $10 trillion, helped by strong equity performance after the S&P 500 returned more than 20% in both 2023 and 2024.
This is a great answer if you’re interviewing for asset management, wealth management, or financial institutions groups. It’s not just “ETFs are popular.” It’s fee compression, distribution strength, investor behavior, and product structure. Vanguard’s ETF assets now total $3.2 trillion, closing in on BlackRock’s $4.3 trillion.
How I’d use this in an interview
If you only remember a few points, use this structure. First, central banks are still constrained by inflation. The U.K. inflation rate moved to 3.0%, the Fed is holding at 4.25% to 4.5%, and tariff risks could delay cuts. Second, tariff uncertainty is affecting real decisions in FX, housing, and corporate planning. Third, companies are responding through scale, restructuring, and capital returns: Shift4 is buying Global Blue, Southwest is cutting corporate staff, HSBC is buying back stock while reducing costs, and Vanguard’s VOO is winning the ETF scale race.
That’s the answer recruiters want to hear. Not a random list of headlines, but a connected view of how macro pressure flows into corporate strategy, valuation, and deal activity.