Week 21 - 2025 Market Analysis Snapshot by FOBEA: Moody's got Moody, FTSE 100 & Gilts hit in US led sell-off! 😨

Ben Johnson
May 19
5 min read

Kicking off the Week (it's definitely Monday) with a shake in one hand and panic in the other.

Disclaimer: This article is educational in nature with satirical comments. Nothing in this article is financial advice. Do you own research - trading and investing is risky and you may lose your investment. Sources are quoted at the bottom of the article. All views expressed are that of the author and not of FOBEA as a whole or its Partners.

Benjamin isn't too chuffed with the Moody's rating and the cheeky bear is here. — *Moody's remove US's AAA credit rating giving cycle theorists their perfect "told you so" for the weekly cycle low.*

Welcome to WC 19 May 2025 Market Analysis - well this week opened with a thunderclap. Moody's scratched the US's final AAA as neatly caricatured on our banner image across poor Mr Franklin's brow. I wonder if he thought the rating would have lasted as long as it has? The downgrade jolted Treasury yields higher, dragged equity futures into the red and unleashed a ripple that knocked nearly 2% off the FTSE 100 while UK gilt prices retreated in sympathy. Sterling retreated and gold danced through another record meaning risk-on assets dramatically rediscovered gravity even in a world lucribated by years of cheap money and meme-coin bravado.

Graph showing altcoin performance — Fartcoin is the top performing coin over the last 90 days

Fartcoin is the best performing Altcoin over a 90 day period. (I literally sit back from my computer, sigh deeply and begrudgingly continue. It makes the cynic in me smile when $665 million dollars can be liquidated within a few hours).

For UK Property investors, the timing could scarcely be more awkward. a softer Bank Rate and cooler CPI readings had begun to coax fixed-rate mortgages below 4 percent again just as spring viewings restarted. Now global risk off flows threaten to re-price credit and shave a fresh slice off household confidence. Developers that were congratulating themselves on margin recovery (see the rally in the FTSE 350 Household Goods & Home Construction index) must weigh the prospect of dearer funding and a more cautious buyer at precisely the moment completions peak.

And yet, as our winking cartoon bear reminds us, volatility is a two-way street. Sterling-denominated assets remain a relative haven when Uncle Sam’s IOUs look shaky, and every spike in gilt yields nudges annuity rates - and therefore landlord pension demand- upward. The frightened, crimson-hued trader at centre stage captures the mood, but the backdrop of candlesticks whispers a subtler message: price swings create entry points as well as exit wounds. With that in mind, let’s drill into the numbers that shaped the week.

#1: Market Analysis Snapshot - WC 19/05/25

#	Indicator (units)	Latest reading	3-mth trend	Why investors care
1	Bank Rate (%, BoE)	4.25	⇩	Sets the floor for UK mortgage and savings rates; cuts trim funding costs for buyers.
2	UK CPI YoY (%)	2.6	⇩	Cooling inflation reduces pressure on the Bank of England to keep rates elevated.
3	US M2 (US$ trn)	21.76	→	A proxy for global liquidity; changes can spill into risk assets such as UK property.
4	Fed funds range (%)	4.25 – 4.50	→	Anchors dollar funding costs and guides cross-border capital flows into sterling assets.
5	S&P 500 (index pts)	5 958	→	Global risk barometer; equity rallies buoy sentiment toward higher-beta UK investments.
6	Crypto market cap (US$ trn)	3.2	⇩	Rising digital-asset wealth sometimes leaks into buy-to-let deposits and refurb budgets.
7	FTSE 350 Household Goods & Home Construction (pts)	11 681	⇧	Tracks listed UK builders and DIY retailers—forward-looking read on housing demand.
8	DJ U.S. Home Construction (pts)	16890	⇩	U.S. builder sentiment hints at where global materials costs and risk appetite head next.
9	UK mortgage arrears (% of loans)	1.03	⇩	Early-warning light for distressed sales and price capitulation.
10	Recession probability — UK (% next 12 mths)	40	⇧	Higher odds cap price-growth expectations and lending appetite.
11	Recession probability — US (% next 12 mths)	45	⇧	A U.S. downturn would dent London’s financial-services engine and prime-property demand.
12	Gold price (US$/oz)	3 228	⇧	A classic fear gauge; bullion strength often coincides with safe-haven bids for London trophies.

#2: What This Signals for UK Property Investors

Bank Rate: Half of an inch off - definitely not a buzz-cut.

Rates at 4.25% from 4.50% knocks off roughly £60 monthly payments on a typical £250k tracker. Fixed-rate offers are drifting below 4%, nudging first-time-buyer enquiries higher, yet affordability remains far tighter than the 2021 frenzy. In other words 🤨 The BoE has offered you a bit of a digestive whilst marketing it as a Sunday brunch. We're still extremely hungry...

Inflation: The Thermostat Turns Down

Headline CPI at 2.6% cools wage pressure and eases construction-cost inflation. Lenders are reopening five-year fixes, and real yields have edged positive which is good news for buy-to-let cash-flow hunters.

In other words 🤨

Officially prices are "under control"; unofficially your builder's quote still comes sprinkled with truffle dust and extremely questionable suggestions.

Liquidity & Risk Appetite

Broad US M2 is flat, yet the crypto market cap is still comfortably above the $3 trillion mark and the Fear and Greed index is sitting right in the Greed section. Regarding property - this dictates fresh speculative wealth chasing quirky Air BnBs and off-plan flats.

In other words 🤨

If someone can re-mortgage their house based off a JPEG of a space-koala granting you access to a rented super-yacht.... expecting bidding wars on anything labelled "loft." Michael Saylor (Micro Strategy) and Larry Fink (Blackrock) are buying BTC like it's going out of fashion, they can't both be wrong can they?

Builders' Divergence

The FTSE 350 Home-Goods index has slightly rallied while the DJ U.S Home Construction gauge slid. UK builder's cheer softer inputs and Help-to-Buy rumours whilst US peers juggle 7% mortgages.

In other words 🤨

Britain's builders are calmer than Cali surfers, mainly because UK planning moves slower than the Californian fault plates.

Mortgage Arrears: Plateau?

Arrears remain stuck at 1.3% percent of balances. Lender forbearance and a modest GDP uptick keep forced sales scarce, limiting bargain-hunter opportunities especially in the homeowner space.

In other words 🤨

The only people handing back keys are Tesla owners who discovered the charger cable won't reach the sofa (this one is weak I know. I also have no gripe with Tesla for the record.).

Recession Watch

Probabilities sit at 40% for the UK and 45% for the U.S. Yield curves stay inverted, but services PMIs cling to expansion suggesting a "slow-cession" rather than a Lehman redux.

In other words 🤨

Imagine using your O2 data as a hotspot whilst watch a Netflix buffer wheel, painful, inevitable yet you'll still get to finish Squid Game (then sub-let the the spare room to pay for the subscription).

Safe-haven Shuffle

Spot gold at $3224 (time of recording) an ounce has recently hit a fresh record after the US downgrade. A softer dollar and fear bid underpin demand for sterling-price London trophy apartments.

In other words 🤨

Investors are stuffing bullion and Belgravia townhouses under the mattress - anything shiny that helps them sleep.

#3: Headlines of the Week

US loses last perfect credit rating amid rising debt: Moody’s yanked the US’s final AAA, pushing Treasury yields higher and shaking global markets. UK property investors now face the double-edged sword of a stronger fear-bid for safe assets (see Gold price) but costlier global funding. Reuters Uncle Sam’s credit card got declined; suddenly my 95 percent LTV looks positively positive.

FTSE 100 and gilts slump in US-led sell-off: London equities and bonds followed Wall Street lower after the downgrade, mirroring wobblier sentiment flagged in S&P 500 and FTSE 350 readings. Developers counting on ever-rising share prices should note how quickly mood (pun intended) music changes. Federal Reserve

Satirical aside: London caught a cold because America sneezed - time to invoice Washington for the Lemsip.

#4: Quote of the Week: Trump tells Walmart to "eat the tariffs" 😆

A cartoon of Trump's latest quote — A cartoon of Trump pushing back on Walmart

#5: Final thoughts?

Rate relief and cooler inflation offer a narrow refinancing window and some scope for opportunistic purchases, but elevated recession odds and jumpy global markets demand discipline. Focus on cash-positive rentals, negotiate hard with sellers and developers eager to clear inventory, and keep powder dry for Q4 volatility.

For those with biting mortgages and assets you'd consider risky, if you're ever going to leave the market, now's the time to do it. But remember, if you're already thinking this, someone has already done it.

In other words: Dance near the exit, sip the lukewarm prosecco and pretend you enjoy the DJ’s “soft-landing” remix.

TL;DR: It's not looking good is it. Best I can do is offer you 5%