SSIM: Six Grey Swans that could move markets in 2026
A Grey Swan is an outlier scenario which - though unlikely - has the potential to shape markets in meaningful ways if it happens. Because the future rarely unfolds exactly as expected, every year State Street Investment Management examines possibilities that sit outside the base case to strengthen a risk aware approach. For investors, such an exercise encourages more flexibility to adapt and adjust portfolios if unexpected events arise.
1. AI fails to scale - A failure to scale challenges consensus AI growth expectations. In this scenario, it would make sense for investors to reassess exposure to semiconductor makers, data center operators, and AI-driven platforms as well as move to adopt more defensive and diversified positions.
2. China goes shopping - In this scenario, China jolts markets and policymakers by unleashing a bold, demand-driven pivot: letting the RMB rocket higher and, most crucially, turning decisively inward to revive domestic consumption. RMB currency strength and policy clarity attract foreign inflows into equities and bonds, lift sentiment across Asia, support regional currencies, and underpin commodity demand.
3. Fortress North America - If the 2026 USMCA review doesn't lead to a collapse of the agreement but to a reconstruction phase that redefines North American trade and security architecture. Renegotiations could lead to a far more integrated trade and economic framework that bind both Canada and Mexico much more closely to the US economic, energy, and defense ecosystem.
4. Oil rockets toward $100 barrier - A sharp rise in geopolitical risks could significantly disrupt supply and result in the rerouting of global oil flows.
5. When normalization is a Grey Swan: Yen carry unwind - If Japanese policies accelerate and mark a meaningful departure from decades of ultra-loose policy and introduces potential volatility into global capital flows, the ramifications could be very significant.
6. Sovereign warnings trigger bond shock - In Europe, France appears the most likely candidate for a bond shock, as high deficits are not only mixed with low growth, but are complemented by a growing political crisis.