Banks ask market questions because they want to see commercial awareness – can you connect what's happening in the world to what investment bankers do? You don't need to be a macro expert, but you need a framework and a few talking points ready.
What to Read and Track
You don't need to read everything. A focused daily habit of 15–20 minutes is enough:
Daily: Financial Times or Wall Street Journal headlines. Bloomberg Markets for quick takes. Focus on the front page and the corporate/deals section.
Weekly: The Economist for macro perspective. Dealogic or Mergermarket for recent M&A activity. Sector-specific newsletters if you're targeting a specific group.
Track: Key interest rates (Bank of England base rate, Fed funds rate, ECB deposit rate), major stock indices (FTSE 100, S&P 500), and any big deals in the news.
Key Macro Indicators and Why They Matter
Interest rates: Higher rates = more expensive debt = fewer LBOs = lower deal activity. Lower rates = cheaper financing = more M&A and leveraged deals. This is the single most important macro factor for IB.
Inflation: Persistent inflation leads to higher interest rates (central banks raise rates to cool demand). Affects company margins and consumer spending.
GDP growth: Economic growth supports deal activity. Recession fear suppresses it. Know whether the major economies are growing or contracting.
Unemployment: Low unemployment = strong economy = confident deal-making. Rising unemployment signals caution.
How to Talk About Recent Deals
Have 2–3 recent deals prepared. Structure each one:
The deal: Who acquired whom, for how much, what structure (cash/stock/mix).
The rationale: Why did it happen? Synergies, strategic positioning, market consolidation?
The valuation: What multiple was paid? How does it compare to peers?
Your view: Do you think it was a good deal? Was the price fair? Any risks?
Pick deals relevant to the group you're interviewing with. If you're interviewing for TMT, discuss a tech deal. Interviewers want to see you've done your homework.
How to Answer 'What's Happening in the Markets?'
Don't try to cover everything. Pick 2–3 themes and go deep enough to show understanding:
A strong answer might touch on the current interest rate environment and what it means for deal activity, one sector trend (e.g., AI-driven M&A in tech, consolidation in healthcare), and one recent deal or IPO. Connect each point to investment banking – how does it affect what banks are doing?
The worst answer is a surface-level news summary. The best answer connects a market event to its implications for deal-making. 'Rates have been falling, which is making leveraged deals more attractive – we're seeing an uptick in LBO activity' is much stronger than 'the stock market went up this week.'
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