What if the Bank of Japan surprises with a hike to 1.5%?
A shock BOJ hike to 1.5% is the carry-unwind detonator: the cleanest move is yen-funded longs liquidating — high-beta crypto (SOL) and Nasdaq dump as USDJPY collapses and 2y JGB/UST yields jump. This is precisely the Aug-2024 unwind, when a 15bp BOJ hike plus weak US payrolls sent the Nikkei -12.4% and SOL/Nasdaq gapped down before snapping back. Forward: positioning is lighter than July-2024, so the dislocation may be sharper but shorter-lived.
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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 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. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. The BOJ unexpectedly lifts the policy rate to 1.5% to defend a 160 yen, detonating remaining carry trades and JGB-linked leverage. The trigger decomposes into signed root‑shocks — FX carry appetite ▼ · Fed policy path ▲ · Risk appetite ▼ — which propagate through our causal graph to the markets below.