Allview: Market Risk Monitor

Key takeaways

• Geopolitical risks continue to dominate the top of our list with three of the top four market risk concerns focused on military conflicts.
• We’ve elevated four items higher up the list this month—all of which are related to the war in the Middle East.
• Moving up to #2 is the risk that “bond vigilantes” may start to demand materially higher interest rates for U.S. government debt. The war will expand the current U.S. budget deficit. Longer-term, higher levels of inflation may also warrant a refactoring of bond yields.
• The risk of a global recession is back on the table (at #6) as European and Asian economies dependent on Middle Eastern oil struggle with supply disruptions and higher prices.
• While the midterm elections in the U.S. are still over six months away, a spike in gas prices makes a “blue wave” more likely.
• New to the list at #9 is the risk that civil unrest might reignite in developing nations as energy and fertilizer prices make food shortages a possibility.