Investing.com -- Deutsche Bank told clients in a note Monday that current market pricing rests on an optimistic set of assumptions that are unlikely to hold together, warning that the balance leaves almost no margin for error.

Macro strategist Henry Allen said risk assets are buoyant with global equities at records, rates markets expect central banks are nearly done hiking, and commodity markets are treating supply shocks as contained.

"This goldilocks window isn't a sustainable equilibrium," he wrote, adding that markets are "pricing a near-immaculate scenario where basically everything goes right."

The bank laid out two scenarios. If growth stays robust, financial conditions ease further and pressure builds on central banks to hike faster.

Deutsche Bank noted Bloomberg's index of U.S. financial conditions recently reached its most accommodative level since 1996, while headline and core inflation remain above target in most major economies.

It flagged that markets price only a single Fed hike, and that a "one-and-done" cycle is historically rare.

If growth instead slows, the support for risk assets fades, noted Allen. Deutsche Bank stated that this does not require a recession, pointing to corrections in 2015-16 and the 2022 bear market as episodes where slowdowns alone triggered repricing.

The bank added that supply shocks compound the problem, with oil below recent peaks and the futures curve sloping lower despite the Strait of Hormuz remaining blocked. A fresh shock, it said, could hit equities and bonds simultaneously.