Possible scenario
Volatility Turns Disorderly
20% Chance
A less likely but material risk is that the historic return damage triggers forced de-risking by leveraged bond investors and risk-parity strategies. The Treasury market remains functional, but liquidity deteriorates enough to tighten financial conditions quickly.
Initial impacts
- Riskier companies' borrowing costs Up
- Market volatility Up
- 10-year Treasury yield Up
- US dollar Up
Secondary impacts
- Finance -2.3%
- Technology -2.3%
Portfolio impact
S&P 500-2.1%
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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