Finimize - 🇬🇧 Britain got bruised

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Today's big stories

The Fed compromised, announcing a 0.25-percentage-point hike and hinting we’re close to the peak
It might be time to start worrying about a “Minsky moment” – Read Now
The UK’s inflation data for February showed prices jumped way higher than expected

Treading Carefully

What’s Going On Here?

The Federal Reserve (Fed) nudged rates up by 0.25 percentage points on Wednesday.

What Does This Mean?

The Fed usually does its best to signpost coming decisions – so by the time it announces any changes to rates, the market’s normally already quizzing its chairman about his next moves. But with three bank failures over the past few weeks, some have pinned the blame on the Fed's fastest-ever rate-hiking schedule – and that meant there was an unusual amount of uncertainty leading up to Wednesday's announcement.

There were calls from some quarters for the Fed to pause hikes, sit back, and watch how the economy would fare. But only a week or so ago, it was an odds-on bet the Fed would jack rates up by 0.5 percentage points. In the end, then, the central bank compromised, with a smaller rate increase and an acknowledgment that bank failures could impact folk’s ability to borrow. And that admission might mean this rate rise is its last.

Why Should I Care?

For markets: Move fast and (try not to) break things.
The fastest rate-hiking cycle in the Fed’s history was bound to leave some collateral damage. After all, we’re not talking chaos theory here: interest rates and banks are closely intertwined. But the Fed could still be vindicated: if a few smallish bank failures are the price the US pays to tame inflation – and if any incoming recession’s mild – then the central bank could yet emerge as a hero.

The bigger picture: Data dependent.
The Fed’s committed to acting in accordance with the numbers – but the economic figures have been all over the place lately, and that makes depending on the readouts pretty risky. Just look at the UK, where inflation’s staged a sudden and unexpected resurgence. So if the data keeps hopping around, maybe it’s time for the Fed to rethink its dependency on it – and start being a bit more forward-thinking.

You might also like: It could be the start of a bull market…or not.

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Analyst Take

We Could Be Dangerously Close To A “Minsky Moment”

Stéphane Renevier, Analyst

It’s a risk no one wants to think about, and it could be rising.

It’s what’s known as a “Minsky moment”, a sudden and severe market correction that follows a period of market excesses and debt buildup.

That dreaded bust comes after years of boom – and it tends to have wide-reaching consequences for people and the economy.

That’s today’s Insight: everything you need to know about the Minsky moment and what you can do now to protect your portfolio.

Read or listen to the Insight here

Discover exactly how other investors are investing

Humans are curious creatures: we want to know about others’ dating lives, work, and finances.

You’ll probably be thrilled about this, then: IG has interviewed hundreds of its very own clients, and found out what they’re investing and planning to invest – and their reasons why.

On the whole, IG said its investors are mainly working toward financial freedom, rather than aiming to fund a luxury lifestyle or upgrade their social status.

Some are saving money up for their children’s education and family holidays, while younger investors are more focused on building up a deposit for a property.

And as for which investments they’re choosing to help them reach those goals – well, you can read about them right here.

Find Out More

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