Core Viewpoint - The article discusses the scenario analysis conducted on investment portfolios in light of concerns over slowing economic growth and rising prices due to tariffs in the U.S. [1] Inflation Scenario - The inflation rate is set to increase by 0.5% and 1%, rising from the current rate of 2.8% to 3.3% and 3.8% respectively, which is incorporated into various inflation scenarios [8] - The analysis utilizes the 5-year zero-coupon bond inflation rate as a factor for stress testing, calculating returns based on its correlation with inflation [8][9] Recession Scenario - The article outlines the potential for a recession, with the Atlanta Federal Reserve predicting negative GDP growth in Q1 2025, raising market concerns despite the absence of current negative GDP data [7] - Historical impacts of various economic recessions are reviewed to establish representative factors for the recession scenario [10] Historical Recession Analysis - The article presents historical return rates during different recession periods, indicating significant declines in stock and high-yield bond returns, while government bonds showed varying performance [11] - Two recession scenarios are defined: mild and severe, with corresponding impacts on asset returns [13] Investment Strategy Impact - The analysis explores how different investment strategies perform under various economic conditions, highlighting that strategies with higher equity allocations tend to underperform during recession scenarios [19] - Core bond strategies demonstrate resilience in mild recession scenarios, mitigating the negative impacts of declining stock returns [19] Conclusion - The article illustrates how to test investment strategies under changing macroeconomic conditions such as rising inflation, recession, or stagflation, emphasizing the use of selected factors and indicators for robust analysis [20]