Possible scenario
Credit Stress Emerges
20% Chance
The equity selloff could spread into credit if investors conclude higher-for-longer rates will pressure refinancing and leveraged balance sheets. This is less likely than a simple equity reset, but it would produce a more defensive cross-asset response.
Initial impacts
- Riskier companies' borrowing costs Up
- Market volatility Up
- 10-year Treasury yield Down
Secondary impacts
- Consumer Cyclicals -2.8%
- Finance -2.7%
- Industrials -1.5%
Portfolio impact
S&P 500-2.0%
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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