Possible scenario
Bond Vigilante Repricing
25% Chance
The deficit headline sharpens concerns that federal borrowing will remain elevated even outside recession conditions. Investors begin to price a larger fiscal risk premium, with the long end of the Treasury curve underperforming and credit spreads widening modestly.
Initial impacts
- Riskier companies' borrowing costs Up
- Market volatility Up
- 10-year Treasury yield Up
- US dollar Up
Secondary impacts
- Technology -1.5%
- Utilities -1.1%
Portfolio impact
S&P 500-1.2%
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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