What if BOJ overshoots tightening and tips Japan back into deflation?
Hiking too far into a fragile recovery, the BOJ chokes off reflation and is forced to reverse, a credibility setback that whipsaws the yen and reignites global carry once policy re-eases.
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 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. 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-off shock. Hiking too far into a fragile recovery, the BOJ chokes off reflation and is forced to reverse, a credibility setback that whipsaws the yen and reignites global carry once policy re-eases. The trigger decomposes into signed root‑shocks — Volatility (VIX) ▲ · FX carry appetite ▼ · Recession signal ▲ · 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 | Solana SOLon Hyperliquid 📈 chart | Crypto | ▼ -0.8% hist -2.73–+0.86% · other way -3.1% (n=10) |
| 2 | Volatility (VIX) VIXon Hyperliquid 📈 chart | Vol | ▲ +0.8% hist -2.1–+1.62% · other way -7.07% (n=12) |
| 3 | MicroStrategy MSTRon Hyperliquid 📈 chart | Equity | ▼ -0.8% hist -3.26–+0.69% · other way +23.24% (n=12) |
| 4 | Hyperliquid (HYPE) HYPEon Hyperliquid | Crypto | ▼ -0.7% model prior · unmeasured |
| 5 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▼ -0.7% hist -0.54–+0.09% · other way +0.63% (n=12) |
| 6 | Ether ETHon Hyperliquid 📈 chart | Crypto | ▼ -0.6% hist -9.07–+3.53% · other way +2.79% (n=11) |
| 7 | Bitcoin BTCon Hyperliquid 📈 chart | Crypto | ▼ -0.5% hist -1.74–+0.56% · other way +9.75% (n=11) |
| 8 | Financials XLF 📈 chart | Equity | ▼ -0.4% hist -0.99–+0.15% · other way -0.27% (n=12) |
| 9 | Tech sector XLK 📈 chart | Equity | ▼ -0.4% hist -0.31–+0.02% · other way +0.75% (n=12) |
| 10 | High-yield credit HYG 📈 chart | Rate | ▼ -0.4% hist -0.45–-0.03% · other way -0.23% (n=12) |
| 11 | S&P 500 SPXon Hyperliquid 📈 chart | Index | ▼ -0.3% hist -0.25–+0.12% · other way +0.24% (n=12) |
| 12 | Coinbase COINon Hyperliquid 📈 chart | Equity | ▼ -0.3% hist -4.31–+4.16% · other way +23.11% (n=10) |
| 13 | Semiconductors SMHon Hyperliquid 📈 chart | Equity | ▼ -0.2% hist -0.44–+0.56% · other way +3.44% (n=12) |
| 14 | USD/JPY USDJPYon Hyperliquid 📈 chart | FX | ▼ -0.2% hist -0.2–+0.12% · other way +0.37% (n=12) |
Probable recommendation
Historical precedent — what analogous events actually did
Across 38 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 |
|---|---|---|---|---|---|---|
| SOL SOL | SHORT | -2.2% · 5d -7.4% | 78% | 9 | 0.43 | ✓ matches cascade |
| ETH ETH | SHORT | -8.3% · 5d -7.6% | 71% | 14 | 0.34 | ✓ matches cascade |
| MSTR MSTR | SHORT | -2.6% · 5d -3.2% | 61% | 31 | 0.18 | ✓ matches cascade |
| High-yield credit HYG | SHORT | -0.2% · 5d -0.5% | 62% | 26 | 0.18 | ✓ matches cascade |
| JPM JPM | SHORT | -1.4% · 5d -0.8% | 59% | 37 | 0.18 | ✓ matches cascade |
| XLF XLF | SHORT | -0.7% · 5d -0.5% | 59% | 29 | 0.16 | ✓ matches cascade |
| Gold XAU | LONG | +0.3% · 5d -0.9% ↺ fades | 57% | 28 | 0.12 | · |
| SPX SPX | LONG | +0.3% · 5d -0.7% ↺ fades | 55% | 38 | 0.10 | ⚠ differs |
| 10y yield DGS10 | SHORT | -6bp · 5d +1bp ↺ fades | 55% | 38 | 0.08 | · |
| Bitcoin BTC | SHORT | -1.4% · 5d -4.6% | 53% | 19 | 0.04 | ✓ matches cascade |
| AUD AUD | SHORT | -0.2% · 5d -0.4% | 52% | 27 | 0.03 | ✓ matches cascade |
| NDX NDX | LONG | +0.4% · 5d -0.4% ↺ fades | 51% | 37 | 0.02 | ⚠ differs |
| Volatility VIX | SHORT | -2.6% · 5d +5.7% ↺ fades | 50% | 36 | 0.00 | ⚠ differs |
| XLK XLK | LONG | +0.2% · 5d -0.4% ↺ fades | 48% | 29 | 0.00 | ⚠ differs |