What if the Bank of Canada cuts far below the Fed and sinks the loonie?
BoC easing aggressively while the Fed holds blows out 2y differentials and pushes USDCAD past 1.50: the trade is short CAD on the rate gap, with the loonie the cleanest expression and a softer DXY-ex-CAD risk-on impulse. Rhymes with the 2014-15 BoC surprise cuts that drove CAD weakness as oil and the Fed diverged. Canada exports energy/autos to the US; a weak loonie cushions exporters but imports inflation. Forward: USMCA tariff overhang means CAD weakness could overshoot the rate gap.
how we built this number — every step
The class rate is measured from our dated, sourced event library (decade-normalized Poisson — the full table is public at base_rates.json). The variant’s share within its class is the analyst’s editorial call, published so you can audit it. A wider range means thinner precedent. Full recipe: methodology · scored at Reality Check.
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 (gold) over time vs the crowd's (Polymarket, blue), from the past toward the 0–6 months 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. The gold path is an illustrative reconstruction anchored to today's estimate — real dated events, not a live re-estimate history.
What it would mean
If this plays out, it is a risk-on shock. The Bank of Canada eases aggressively while the Fed holds, blowing out rate differentials and crushing the loonie past 1.50. The trigger decomposes into signed root‑shocks — Fed policy path ▼ · Growth surprise ▼ — which propagate through our causal graph to the markets below.
If it happens — the markets it would move
Biggest moves first. Projected moves are cascade-model priors; hist A–B% = what comparable past events actually did (measured abnormal returns), and model prior · unmeasured marks markets with no analogue backing yet. Tap any market for its price history.
| Market | Class | Projected move | |
|---|---|---|---|
| 1 | MicroStrategy MSTRon Hyperliquid 📈 chart | Equity | ▲ +1.2% hist -1.06–+4.28% · other way +5.93% (n=11) |
| 2 | Solana SOLon Hyperliquid 📈 chart | Crypto | ▲ +0.9% hist -5.08–+1.42% · other way -5.21% (n=11) |
| 3 | Tech sector XLK 📈 chart | Equity | ▲ +0.8% hist -0.3–+2.06% · other way -0.31% (n=11) |
| 4 | Bitcoin BTCon Hyperliquid 📈 chart | Crypto | ▲ +0.8% hist -3.79–+1.6% · other way +0.34% (n=11) |
| 5 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▲ +0.7% hist -0.24–+1.44% · other way -0.49% (n=11) |
| 6 | Hyperliquid (HYPE) HYPEon Hyperliquid | Crypto | ▲ +0.7% model prior · unmeasured |
| 7 | Ether ETHon Hyperliquid 📈 chart | Crypto | ▲ +0.7% hist -8.99–+2.68% · other way -1.19% (n=11) |
| 8 | Gold XAUon Hyperliquid 📈 chart | Commodity | ▲ +0.6% hist -0.22–+1.44% · other way +2.39% (n=11) |
| 9 | US dollar (DXY) DXYon Hyperliquid 📈 chart | FX | ▼ -0.6% hist -0.63–-0.04% · other way +0.92% (n=12) |
| 10 | 2y Treasury yield DGS2 | Rate | ▼ -6bp model prior · unmeasured |
| 11 | 30y Treasury yield DGS30 📈 chart | Rate | ▼ -6bp hist -3.59–+1.27% · other way +25.2% (n=12) |
| 12 | 10y Treasury yield DGS10 📈 chart | Rate | ▼ -5bp hist -3.36–+0.49% · other way +30.6% (n=12) |
| 13 | EUR/USD EURUSDon Hyperliquid 📈 chart | FX | ▲ +0.5% hist +0.06–+0.52% · other way -0.49% (n=11) |
| 14 | Coinbase COINon Hyperliquid 📈 chart | Equity | ▲ +0.5% hist -0.09–+0.33% · other way +9.23% (n=11) |
Probable recommendation
Why we may diverge from history
Trust history's short on HOOD: clean rate-cut analogues (Turkish lira -32%, India -10%) dominate the cascade's loonie-divergence long — easing-driven EM/high-beta drawdowns are the real path here.
Historical precedent — what analogous events actually did
Across 40 analogous events (overlap‑weighted), as abnormal returns — market beta stripped, so it's the event's own effect, not the market backdrop. Shown at 20 days (persistent) and 5 days (immediate); ↺ fades = the two horizons disagree. Confidence = consistency × sample × significance.
| Asset | History says | Abnormal (20d · 5d) | Hit | n | Confidence | vs cascade |
|---|---|---|---|---|---|---|
| SPX SPX | LONG | +1.1% · 5d -0.1% ↺ fades | 70% | 40 | 0.38 | ✓ matches cascade |
| SOL SOL | SHORT | -4.7% · 5d -5.4% | 68% | 36 | 0.31 | ⚠ differs |
| ARM ARM | SHORT | -4.8% · 5d -5.6% | 70% | 23 | 0.28 | ⚠ differs |
| MU MU | SHORT | -2.7% · 5d -2.4% | 66% | 40 | 0.26 | ⚠ differs |
| US dollar DXY | SHORT | -0.3% · 5d -0.1% | 64% | 40 | 0.25 | ✓ matches cascade |
| ETH ETH | SHORT | -8.2% · 5d -5.1% | 66% | 36 | 0.24 | ⚠ differs |
| XLK XLK | LONG | +1.5% · 5d +0.0% | 61% | 40 | 0.20 | ✓ matches cascade |
| EURUSD EURUSD | LONG | +0.2% · 5d +0.0% | 62% | 39 | 0.20 | ✓ matches cascade |
| XHB XHB | SHORT | -1.4% · 5d -1.3% | 62% | 39 | 0.20 | ⚠ differs |
| Bitcoin BTC | SHORT | -3.8% · 5d -2.5% | 62% | 37 | 0.18 | ⚠ differs |
| TRY TRY | SHORT | -3.6% · 5d +0.2% ↺ fades | 60% | 39 | 0.18 | ⚠ differs |
| JPM JPM | LONG | +1.3% · 5d +0.3% | 61% | 40 | 0.18 | ✓ matches cascade |
| GBPUSD GBPUSD | LONG | +0.3% · 5d -0.1% ↺ fades | 60% | 39 | 0.16 | ✓ matches cascade |
| 30y yield DGS30 | LONG | +3bp · 5d +2bp | 59% | 40 | 0.15 | ⚠ differs |
Why this probability
BoC already well below Fed; loonie near 1.50 a live, partly-developing path in 6mo. A base‑rate‑anchored prior, continuously scored against what actually happens — not a forecast.