Possible scenario
Political Fiscal Break
20% Chance
The bond selloff becomes tied to domestic political risk as opposition parties challenge the government's savings plan. Investors demand a higher risk premium if the National Assembly blocks deficit reduction or threatens another government collapse.
Initial impacts
- Riskier companies' borrowing costs Up
- Market volatility Up
- 10-year Treasury yield Down
- US dollar Up
Secondary impacts
- Finance -3.1%
- Utilities -2.1%
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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