Possible scenario
Fiscal Risk Repricing
25% Chance
Investors focus on the $1.8 trillion deficit, elevated quarterly borrowing needs and the growing term premium required to hold long U.S. debt. This path implies a more disorderly move in duration markets, though still short of a systemic crisis.
Initial impacts
- Riskier companies' borrowing costs Up
- 10-year Treasury yield Up
- Market volatility Up
- US dollar Up
Secondary impacts
- Consumer Cyclicals -1.2%
- Utilities -1.1%
Portfolio impact
S&P 500-0.8%
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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