HSBC and Deutsche Bank both issued warnings: the market's "non-stick" resilience is difficult to maintain, and there are undercurrents of corporate taxes and debt risks.

In recent years, the global market has continuously withstood multiple shocks, but HSBC believes that several potential variables may ultimately break this resilient situation. These key risks include: an increase in corporate tax burdens, a resurgence of private sector debt, and a structural shift in the traditional relationship between stocks and bonds. Furthermore, if the market's confidence in the central bank's "safety net" expectations wavers, it could also test current risk appetite. HSBC issued this warning in a research report released on Monday. HSBC stated that while the waning of central bank put options may have negative effects, it is difficult to envision this scenario in the short term, especially in the U.S. marketwhere the stock market, wealth effects, and financial conditions are highly interconnected. Given the prominent weight of the U.S. in the global stock and credit markets, HSBC believes that the greatest risk actually originates from the U.S. If corporate tax increases squeeze profit margins, it will place pressure on the stock market; and if inflation retreats to or below target levels, it may restore the negative correlation between stocks and bondsmeaning that when the stock market falls, bond prices rise. The return of this negative correlation may prompt investors to reduce their equity allocations, thus applying downward pressure on valuations. If private sector leverage rises again, it will also make the economy and markets more susceptible to external shocks. However, HSBC noted that current private leverage ratios are still at decades-long lows. HSBC emphasized that these risks deserve attention because the market has exhibited an extremely strong "immunity" to negative news in recent yearswhether it be soaring inflation, increased tariffs, geopolitical conflicts, the unwinding of carry trades, or concerns regarding private credit, none have been able to sustain a shaking of risk assets. "Risk assets seem to be indifferent to every negative catalyst," wrote HSBC strategists in the report. The strategists described the market as a "non-stick pan," believing that despite the plethora of potential negative factors over the past five years, risk assets continue to demonstrate remarkable resilience. Deutsche Bank also questioned how long this resilience can last. In a report released on Monday, the bank pointed out that despite rising real interest rates and increasing inflationary pressures, risk assets still "remain robust under the support of unexpectedly strong global economic growth." Deutsche Bank stated: "The current market equilibrium is unsustainable... Risk assets such as stocks and credit still exhibit a worrisome complacency towards the stagflation shock increasingly priced in by the interest rate market." The report further noted that despite the accumulating inflationary pressures, the interest rate market still only prices in a limited tightening by the central bank; while the stock and credit markets assume that rising yields will not materially harm economic growth. Driving forces behind market resilience HSBC identifies one of the key factors as the strong performance of corporate earnings and economic fundamentals, particularly in the U.S., where market consensus has repeatedly underestimated actual earnings levels. Moreover, this resilience has expanded beyond technology and artificial intelligence sectors. At the same time, U.S. corporate tax rates remain near historical lows. Another factor is the evolution of the stock-bond relationship. As government bonds are no longer able to effectively hedge against stock risks like they used to, investors have reduced their bond allocations in favor of increasing stock holdings and adopting short-cycle hedging strategies, which has somewhat supported elevated stock valuations. The robust wealth effect has also played a role. Household wealth in the U.S. is significantly above pre-pandemic trend lines, with growth predominantly concentrated among high-income households. The holdings of cash and cash-like assets are also far above pre-financial crisis trend levels. Meanwhile, central banks have a richer array of policy tools to respond to market pressures. HSBC noted that the Federal Reserve has nearly 20 potential tools, facilitative measures, and policy backstops, while the European Central Bank has more than ten. Additionally, the reduction in energy intensity and the relatively low levels of private sector leverage have also enhanced the market's capacity to absorb shocks. The impact of soaring oil prices related to conflicts in Ukraine and the Middle East on developed economies has been far less severe than similar events in the 1970s and 1980s.