Possible scenario
Fiscal Credibility Frays
20% Chance
Investors increasingly treat the long-bond selloff as a fiscal-sustainability repricing rather than a routine rate adjustment. Memories of Moody's 2025 downgrade and repeated borrowing forecast increases keep pressure on Treasuries and equities.
Initial impacts
- Riskier companies' borrowing costs Up
- 10-year Treasury yield Up
- Market volatility Up
- US dollar Up
Secondary impacts
- Utilities -4.7%
- Consumer Cyclicals -4.5%
Portfolio impact
S&P 500-3.8%
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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