What if the far-right AfD enters a German state government?
AfD entering a Länder government adds a German political-risk premium to DAX and Bunds, but a +6.8% VIX / -2.8% Nasdaq is wildly outsized for a state-coalition headline — the real, small effect is a modest DAX discount. Rhymes with European populist-entry episodes (Italy 2018, France 2024) that widened domestic risk premia without global contagion. Transmission: foreign-investor caution on German assets; Bunds broadly unaffected as haven. Forward angle: a state-level role has minimal fiscal power, so this is a sentiment/headline risk, not a systemic event — fade the vol spike.
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The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (electric blue) over time vs the market's (Polymarket, amber), from the past toward the 1–3 years horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. Far-right joins a Länder coalition, foreign investors price political-risk premium into DAX and Bunds. The trigger decomposes into signed root‑shocks — Credit spreads ▲ · Geopolitical risk ▲ · Risk appetite ▼ — which propagate through our causal graph to the markets below.