Possible scenario
Deficits Become Baseline
22% Chance
Markets conclude that large U.S. and China deficits are persistent but manageable because domestic savings, central-bank credibility and deep sovereign-bond markets remain intact. Fiscal deterioration stays a background valuation headwind rather than an acute trigger.
Initial impacts
- 10-year Treasury yield Up
- Market volatility Up
- Riskier companies' borrowing costs Up
- US dollar Up
Secondary impacts
- Consumer Cyclicals -0.1%
- Industrials +0.1%
Portfolio impact
S&P 500-0.2%
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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