Deutsche Bank Research Institute examines why markets may be complacent toward escalating geopolitical risks and how fear can trigger sharp risk off episodes. It highlights accident risk from rising military contact, investor status quo bias, and market structures that can amplify drawdowns even without direct conflict.
Geopolitical flashpoints: What markets may be underestimating
Deutsche Bank
Camilla Siazon, Luke Templeman
Research
16 Pages
Key Takeaways
Shock frequency rising: Large equity drawdowns above twenty percent have become more common in recent years.
Fast selloffs: Past conflicts saw swift peak to trough declines from ten to forty five percent.
Gold premium: Gold has begun diverging from real rates as tension elevates hedging demand.
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