Conditional scenarios across asset classes

scenarioPublished 16 October 20261 min readmulti asset

Key points

• Each scenario has an assumption, not a probability.
• Bonds, equities, credit, commodities and currencies can diverge.
• The selector on the outlook page is a reading aid, not a model.

What is going on

Inflation persistence, a growth slowdown, a policy surprise, sovereign-debt stress, tighter liquidity, index concentration, a geopolitical shock, an energy disruption, credit stress and a currency swing are recurring ways markets have been forced to reprice. The IMF and the BIS write about these as states of the financial system. They do not hand this desk a probability for the next quarter, and this note does not invent one.

Why it matters

The point of a matrix is to stop a single headline from being applied to every holding. An inflation shock and a growth slowdown can both be called “bad for risk” and still imply different paths for real yields, for credit, and for gold versus oil. Naming the mechanism is the research. Naming a winner is a forecast this page does not make.

What to watch

Match the indicator to the scenario. Inflation releases and wages for an inflation path. Employment, surveys and earnings for a growth path. Funding markets and volatility for a liquidity path. Auction results and fiscal announcements for a sovereign path. If the indicator is quiet, the scenario is not confirmed.

Risks

Scenarios overlap. A geopolitical shock can be an energy shock and a growth shock at once. Indicators lag. A correct mechanism can still be the wrong size. The interactive list on the outlook page exists so a reader can inspect one path at a time. It does not score them.