Rate Hikes Back on the Table. Does This Spell Recession?

Show Notes

This week on The Art of Investing, Rich McDonald, Mark “Spice” Holden and Chris “CJ” Fellingham are joined by Stu Thompson, Economic Strategist, to break down a market being driven less by fundamentals, and more by shifting interest rate expectations.

With central banks holding steady but markets rapidly repricing from rate cuts to potential hikes, the team explore whether interest rate expectations have become disconnected from reality.

They also dive into continued stress in private credit, the impact of oil and geopolitics on inflation, and why bond markets are no longer providing the diversification investors expect.

The big question: are markets overreacting, and where are the opportunities if they are?

This Week’s Highlights:

🏦 Rate Expectations Flip

Markets move from pricing cuts to multiple hikes, a huge shift in sentiment.

📉 Bonds Fail to Diversify

Gilts and treasuries fall alongside equities, challenging traditional portfolio theory.

⚠️ Private Credit Stress Builds

Redemption limits and liquidity concerns continue to emerge.

⛽ Oil & Inflation Risk

Energy prices remain the key driver of inflation expectations.

📊 Markets Still Resilient

Despite volatility, equities hold up better than many expected.

🧠 Don’t Fight the Noise

Why long-term investors should avoid reacting to short-term headlines.

Portfolio Snapshot - Week 32:

Weekly performance: –1.7%

Total return since inception: +12.5%

Top Performers

🥇 iShares Russell 2000 ETF: +1.1%

🥈 Cash: +0.1%

🥉 iShares UK Gilts 0–5yr ETF: –0.4%

Underperformers

📉 WisdomTree Copper ETF: –5.4%

📉 VanEck Crypto & Blockchain Innovators ETF: –3.7%

📉 iShares MSCI India ETF: –2.9%

Portfolio Positioning:

The portfolio remains diversified across:

• Commodities and real assets

• Global equities (US, UK, Europe, EM)

• Small and mid-cap exposure

• Bonds and cash as stabilisers

However, this week highlights a key theme: diversification doesn’t always protect during inflation-driven shocks.

Big Questions This Week:

• Have interest rate expectations become unrealistic?

• Are central banks likely to follow market pricing?

• Is private credit the next major risk area?

• Can equities continue to hold up if rates stay higher?

What You’ll Learn:

✔️ How markets price interest rates (and why it matters)

✔️ Why bonds don’t always offset equity risk

✔️ What’s really driving current market moves

✔️ How to stay disciplined during volatile periods

📈 Download the full Portfolio Performance Slides

View the portfolio breakdown: here

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Disclaimer:

This podcast is provided for educational and informational purposes only. The content presented is not intended as personal investment advice or a recommendation to buy, sell, or hold any particular securities or investments. All discussions regarding the model portfolio are illustrative and for educational purposes.

Your capital is at risk. The value of shares, ETFs and ETCs can fall as well as rise, which could mean getting back less than you originally put in.

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What is The Art of Investing?

Looking to turn Market Chaos into Investing Clarity?

Welcome to The Art of Investing - a brand new podcast that transforms market noise into clear investing strategies. Brought to you by IG, global investing platform, FTSE 250 and over 50 years in the markets.

This isn't your typical finance show.

Whether you're taking your first steps into the investment world or you're a seasoned investor looking to sharpen your edge, you've found your new secret weapon.

Every Friday, join hosts Rich McDonald, Mark Holden & Chris Fellingham – three investing legends bringing you a combined century of market wisdom. They'll decode the week's biggest moves, reveal the hot topics that could make or break a portfolio, and share the insights that separate winners from wishful thinkers.

But here's where we blow every other podcast out of the water:

Introducing our live Model Portfolio. With IG's access to thousands of global markets, you'll watch our strategy unfold in real-time, unfiltered investment action, that you can follow.
Every week, we'll pull back the curtain on exactly how the portfolio is performing. The wins, the losses, the lessons learned – it's all here. This is investing education with skin in the game.

Are you ready to master the art of investing?

This podcast is provided for educational and informational purposes only. The content presented is not intended as personal investment advice, financial planning guidance, or a recommendation to buy, sell, or hold any particular securities or investments. All discussions regarding the model portfolio are for educational purposes only. Past performance is not an indication of future results. Your capital is at risk. The value of shares, ETFs and ETCs can fall as well as rise, which could mean getting back less than you originally put in.