Market Concepts interview questions

A foundational EM and FX macro question.

What is a current account deficit and why can it matter for a currency?

Sector rotation is a core investment strategy. This tests understanding of market cycles.

What indicators do you monitor to identify sector rotation opportunities, and how do you differentiate between cyclical and structural shifts?

Passive investing has transformed markets. This tests understanding of structural changes.

How has the rise of ETFs and passive investing affected your analysis and the opportunities available to active managers?

ECM analysts are expected to form a practical view on whether a client can launch.

A client asks whether it should launch an equity offering this week. What would you check before advising that the equity window is open?

Macro desks ask this because the same data print can mean different things under different central banks.

What is a central bank reaction function and why is it more important than one data print?

A first-round macro question testing whether you can read a common growth release without overclaiming from it.

What does a purchasing managers' index, or PMI, measure? A manufacturing PMI falls from 54 to 51 and then to 49. What has changed, and what has not necessarily changed?

An FX desk uses this first-round check to see whether you can speak precisely about a market quote.

EUR/USD moves from 1.0800 to 1.0950. Which currency strengthened, by how much, and how would you explain the move to a US importer?

A first-round macro question because almost every asset class trades off real rates.

Explain the difference between nominal rates and real rates. Why do macro investors care more about real rates?

Common in FX macro interviews because it explains why the dollar can rally in opposite regimes.

What is the dollar smile and why is it useful?

Physical-commodities desks use this to test whether a candidate can separate a screen price from what a customer can actually buy or sell.

A Midwest grain elevator owns local corn but hedges with Chicago corn futures. Define basis and explain why the hedge may still leave the elevator exposed.

An FX operations-aware first round checks whether a candidate understands that execution is not complete when a trade is agreed.

A bank sells €25m for dollars to a counterparty for value tomorrow. What is FX settlement risk, and how does payment-versus-payment settlement reduce it?

A sovereign rates and FX question for macro funds.

What is fiscal dominance and how would it show up in markets?

Macro reasoning question for rates desks and macro funds.

The central bank raises rates by 100bps. Walk me through the transmission channels to the real economy and the likely reaction across asset classes.

The recurring event macro desks trade around.

A central bank holds rates unchanged, exactly as expected, and the currency rallies 1.5%. Explain how that happens.

Useful for commodity currencies and EM macro interviews.

A commodity-importing country faces a sudden oil price spike. Walk through the macro and market effects.

A staple opener in sales & trading and macro interviews.

Explain what the yield curve is and what an inversion means. Why has inversion historically preceded recessions, and what are the limits of that signal?

EM FX desks and macro funds test the mechanism, not just the history.

What conditions precede an emerging market currency crisis, and what does the central bank actually do about it?

Macro funds test whether you think about the trade's cost and crowding, not just its thesis.

You have a correct macro view but the trade loses money for six months. Name the mechanisms that can cause that, and how you'd guard against them.

Global macro interviews test expression as much as the view itself.

You believe a central bank will cut rates sooner than the market expects. Give me three ways to express that and tell me which you'd choose.

Macro and FX desk interviews use this to probe understanding of risk premia.

Explain the FX carry trade. Why does it work despite theory suggesting it shouldn't, and what is its risk profile?