Possible scenario
European Backstop Emerges
20% Chance
European institutions move to prevent French stress from becoming a euro-area funding shock. The ECB is unlikely to buy OATs unconditionally, but even verbal support or a credible fiscal path agreed with Brussels could reverse some of the risk premium.
Initial impacts
- Riskier companies' borrowing costs Down
- Market volatility Down
- 10-year Treasury yield Up
- US dollar Down
Secondary impacts
- Finance +1.2%
- Consumer Cyclicals +1.1%
Portfolio impact
S&P 500+0.8%
Each figure is the modeled move of the S&P 500 if the outcome occurs. For information only. Not investment advice.
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