One of the world's largest bond fund managers has drawn up a list of 38 events that could trigger a fresh wave of volatility in financial markets.
An inflation surprise, US interest rate speculation and a rerating of equity market valuations top the list drawn up by Pimco.
Devised over the past few months, the list includes Federal Reserve tapering talk as a precursor to global volatility, an event that has indeed just set off a new wave of currency and stock market realignment.
Markets around the world were on Monday facing further equity and currency selling as global growth fears – particularly about the chance of a third recession in six years for Europe – weigh on most asset classes.
The Pimco list rates the Fed talk trigger as a 20 per cent chance, along with the possibility of a surprisingly high or low inflation – including deflation – figure from a key economy.
Problems in peripheral Europe – denoted by widening bond yield spreads with German Bunds, for example – carry a 10 per cent risk of triggering volatility, as do rising tensions over disputed territory between China and Japan, the collapse of a hedge fund, the failure of quantitative easing (QE) – or bond-buying – by the Japanese central bank, or a QE surprise from the European Central Bank.
An escalation in Middle East conflicts, an economic crash in China or over-leveraging by stock market short-sellers all rate as a 15 per cent chance of triggering volatility.
Although slightly dated and incomplete, the list of "potential volatility triggers" has identified a number of geopolitical risks that "the market might not be paying enough attention to", writes the report's author Vineer Bhansali, a PhD in particle physics who manages quantitative portfolios at the firm.
"Two things stand out," he writes. "First, the list is long and, second, the probabilities are necessarily arbitrary.
"And we are still left with the nagging feeling that we might have accidently missed the most important catalyst (for instance, we included the flu epidemic, but totally missed the unfortunate spread of Ebola)."
Mr Bhansali said that although prices across most asset classes were high by historical metrics, they were "not unhealthy" in the context of the so-called "new neutral" of zero per cent interest rates. However, this still left them vulnerable to sudden shock.
"If you presuppose that zero per cent real rates are the new normal, then you might consider that asset prices are fair," he said.
"However, when we go back to the old model, where real interest rates are at 2 per cent, then everything looks really frothy."
Mr Bhansali likens currently global liquidity and monetary policy as "driving downhill and going really fast in a car but you're not allowed to use your brakes".
He says constant injections of liquidity into economies without any need to "apply the inflationary brakes" has gradually built up market risks.
"You get a lot more exposed to shocks, you get a lot more exposed to bad things happening and that's where we're at right now," he warned.
"You are going to see more and more accident-prone markets take centre stage in the next few weeks."
On the 38-strong list of potential volatility triggers, Mr Bhansali says his own pricing of hedging options for Pimco fund managers suggests markets are still playing down built-up risks.
"I think the markets are expecting a lot more peace and quiet," he said.
"And I think that's a mistake – because even though you can't identify the probabilities, the fact that something bad can happen can really hurt you."
He says the biggest risk to global markets at the moment is the Fed, or some other central bank, having to tighten monetary policy ahead of expectations because of rising inflationary pressures.
"The biggest issue right now is a surprisingly strong print in terms of economic data and withdrawal of liquidity or expectations of liquidity from global central banks that is ahead of schedule," he said.
"I don't think the market is prepared for an implied tightening in global financial conditions."
