Question 1

Scenario A: Escalation?

Accepted Answer

Scenario Analysis Scenario A (Escalation) — 50% * Chain: US-Iran tensions escalate further, leading to renewed sanctions and trade restrictions. Investors react by selling EM bonds, driving yields higher. * Confirmation indicators: Increased rhetoric from both sides regarding the nuclear program and potential military actions, followed by a sharp increase in geopolitical risk premiums across global markets. * Time horizon: 10-20 days Scenario B (Status Quo) — 38% * Chain: US-Iran negotiations stall but remain constructive. EM bond investors maintain expectations of a gradual rally, driven by the potential for some easing in geopolitical tensions and positive economic data from the region. * Confirmation indicators: Continued dialogue between Washington and Tehran with no significant breakthroughs. A slight increase in global risk appetite as refl (12% model probability, not a guarantee)

Question 2

Scenario B: Status Quo?

Accepted Answer

Scenario Analysis Scenario A (Escalation) — 50% * Chain: US-Iran tensions escalate further, leading to renewed sanctions and trade restrictions. Investors react by selling EM bonds, driving yields higher. * Confirmation indicators: Increased rhetoric from both sides regarding the nuclear program and potential military actions, followed by a sharp increase in geopolitical risk premiums across global markets. * Time horizon: 10-20 days Scenario B (Status Quo) — 38% * Chain: US-Iran negotiations stall but remain constructive. EM bond investors maintain expectations of a gradual rally, driven by the potential for some easing in geopolitical tensions and positive economic data from the region. * Confirmation indicators: Continued dialogue between Washington and Tehran with no significant breakthroughs. A slight increase in global risk appetite as refl (64% model probability, not a guarantee)

Question 3

Scenario C: De-escalation?

Accepted Answer

Scenario Analysis Scenario A (Escalation) — 50% * Chain: US-Iran tensions escalate further, leading to renewed sanctions and trade restrictions. Investors react by selling EM bonds, driving yields higher. * Confirmation indicators: Increased rhetoric from both sides regarding the nuclear program and potential military actions, followed by a sharp increase in geopolitical risk premiums across global markets. * Time horizon: 10-20 days Scenario B (Status Quo) — 38% * Chain: US-Iran negotiations stall but remain constructive. EM bond investors maintain expectations of a gradual rally, driven by the potential for some easing in geopolitical tensions and positive economic data from the region. * Confirmation indicators: Continued dialogue between Washington and Tehran with no significant breakthroughs. A slight increase in global risk appetite as refl (24% model probability, not a guarantee)