What if BOJ-Fed policy divergence widens, supercharging the yen carry trade?
A still-easy BOJ against a higher-for-longer Fed widens rate differentials, drawing leverage into yen-funded carry; benign in the near term but building a fragile, crowded position.
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 6–18 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 mixed shock. A still-easy BOJ against a higher-for-longer Fed widens rate differentials, drawing leverage into yen-funded carry; benign in the near term but building a fragile, crowded position. The trigger decomposes into signed root‑shocks — US dollar (DXY) ▲ · FX carry appetite ▲ · Fed policy path ▲ · Risk appetite ▲ — 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 | USD/JPY USDJPYon Hyperliquid 📈 chart | FX | ▲ +0.6% hist -0.18–+1.27% · other way -0.26% (n=12) |
| 2 | US dollar (DXY) DXYon Hyperliquid 📈 chart | FX | ▲ +0.5% hist -0.01–+0.67% · other way +0.46% (n=12) |
| 3 | EUR/USD EURUSDon Hyperliquid 📈 chart | FX | ▼ -0.4% hist -1.32–+0.24% · other way -0.15% (n=12) |
| 4 | Gold XAUon Hyperliquid 📈 chart | Commodity | ▼ -0.4% hist -1.73–+0.52% · other way -0.07% (n=12) |
| 5 | GBP/USD GBPUSDon Hyperliquid 📈 chart | FX | ▼ -0.3% hist -0.59–+0.04% · other way -0.42% (n=12) |
| 6 | Solana SOLon Hyperliquid 📈 chart | Crypto | ▲ +0.3% hist -4.01–+5.64% · other way +18.0% (n=2) |
| 7 | Hyperliquid (HYPE) HYPEon Hyperliquid | Crypto | ▲ +0.3% model prior · unmeasured |
| 8 | Ether ETHon Hyperliquid 📈 chart | Crypto | ▲ +0.2% hist -5.02–+2.91% · other way -10.44% (n=5) |
| 9 | Korean won KRWon Hyperliquid 📈 chart | FX | ▼ -0.2% hist -0.85–+0.27% · other way -0.52% (n=12) |
| 10 | Volatility (VIX) VIXon Hyperliquid 📈 chart | Vol | ▼ -0.2% hist -2.4–+0.99% · other way +5.45% (n=12) |
| 11 | 2y Treasury yield DGS2 | Rate | ▲ +2bp model prior · unmeasured |
| 12 | 30y Treasury yield DGS30 📈 chart | Rate | ▲ +2bp hist +0.49–+1.2% · other way -1.4% (n=12) |
| 13 | Semiconductors SMHon Hyperliquid 📈 chart | Equity | ▲ +0.2% hist -0.18–+0.57% · other way -0.34% (n=12) |
| 14 | 10y Treasury yield DGS10 📈 chart | Rate | ▲ +2bp hist -0.11–+2.41% · other way -1.0% (n=12) |
Probable recommendation
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 |
|---|---|---|---|---|---|---|
| High-yield credit HYG | SHORT | -0.5% · 5d -0.0% | 69% | 26 | 0.29 | · |
| EURUSD EURUSD | SHORT | -1.0% · 5d -0.8% | 61% | 27 | 0.19 | ✓ matches cascade |
| GBPUSD GBPUSD | SHORT | -0.4% · 5d -0.5% | 61% | 27 | 0.19 | ✓ matches cascade |
| ETH ETH | SHORT | -5.2% · 5d -5.1% | 59% | 16 | 0.12 | ⚠ differs |
| USDJPY USDJPY | LONG | +0.9% · 5d +0.0% | 55% | 32 | 0.09 | ✓ matches cascade |
| Gold XAU | SHORT | -1.4% · 5d -1.6% | 54% | 28 | 0.07 | ✓ matches cascade |
| Volatility VIX | SHORT | -2.2% · 5d -0.8% | 53% | 37 | 0.05 | ✓ matches cascade |
| 10y yield DGS10 | LONG | +1bp · 5d +0bp | 53% | 40 | 0.05 | ✓ matches cascade |
| Bitcoin BTC | SHORT | -3.0% · 5d -3.3% | 51% | 20 | 0.02 | · |
| US dollar DXY | LONG | +0.4% · 5d +0.5% | 49% | 40 | 0.00 | ✓ matches cascade |
| SOL SOL | LONG | +5.7% · 5d -5.5% ↺ fades | 39% | 13 | 0.00 | ✓ matches cascade |
| KRW KRW | SHORT | -0.7% · 5d +0.1% ↺ fades | 49% | 27 | 0.00 | ✓ matches cascade |
| 30y yield DGS30 | SHORT | 0bp · 5d 0bp | 49% | 40 | 0.00 | ⚠ differs |
| SMH SMH | LONG | +0.5% · 5d -1.1% ↺ fades | 44% | 28 | 0.00 | ✓ matches cascade |