What if a surprise BOJ hike to 1.5% detonates the carry trade?
A surprise BOJ hike to 1.5% detonates the carry trade: forced unwinds snap USDJPY lower and cascade into AUD, EM-FX and the highest-beta risk as global deleveraging hits. This is a direct replay of the August 2024 unwind, when a 15bp BOJ surprise triggered the Nikkei's worst day since 1987 and a global VaR shock. Japan funds global carry; the channel is leverage, not fundamentals. Forward: positioning is lighter post-2024, so the shock is sharp but shorter.
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-off shock. A surprise BOJ hike to 1.5% detonates the carry trade, snapping USDJPY 15 figures and forcing worldwide deleveraging. The trigger decomposes into signed root‑shocks — FX carry appetite ▼ · Fed policy path ▲ — 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 -6.08–+1.58% · other way +15.48% (n=12) |
| 2 | Solana SOLon Hyperliquid 📈 chart | Crypto | ▼ -0.9% hist -6.82–+6.78% · other way +7.6% (n=8) |
| 3 | Aussie dollar AUD 📈 chart | FX | ▼ -0.7% hist -0.86–-0.06% · other way -1.37% (n=11) |
| 4 | Tech sector XLK 📈 chart | Equity | ▼ -0.8% hist -0.55–-0.16% · other way +2.46% (n=12) |
| 5 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▼ -0.8% hist -0.54–-0.12% · other way +1.78% (n=12) |
| 6 | Bitcoin BTCon Hyperliquid 📈 chart | Crypto | ▼ -0.7% hist -5.79–+2.67% · other way +6.1% (n=9) |
| 7 | Hyperliquid (HYPE) HYPEon Hyperliquid | Crypto | ▼ -0.7% model prior · unmeasured |
| 8 | Turkish lira TRY 📈 chart | FX | ▼ -0.7% hist -6.35–+1.56% · other way +0.66% (n=11) |
| 9 | Ether ETHon Hyperliquid 📈 chart | Crypto | ▼ -0.6% hist -6.18–+3.46% · other way +7.67% (n=9) |
| 10 | Indian rupee INR 📈 chart | FX | ▼ -0.6% hist -0.89–+0.02% · other way -0.71% (n=11) |
| 11 | Gold XAUon Hyperliquid 📈 chart | Commodity | ▼ -0.5% hist -2.01–+0.51% · other way -1.36% (n=12) |
| 12 | US dollar (DXY) DXYon Hyperliquid 📈 chart | FX | ▲ +0.4% hist -0.14–+0.86% · other way +0.3% (n=12) |
| 13 | Volatility (VIX) VIXon Hyperliquid 📈 chart | Vol | ▲ +0.4% hist -0.06–+0.69% · other way -7.72% (n=12) |
| 14 | Coinbase COINon Hyperliquid 📈 chart | Equity | ▼ -0.5% hist -4.28–+5.0% · other way +15.52% (n=6) |
Probable recommendation
Why we may diverge from history
Trust the cascade short on HOOD: the +9.3% leans on idiosyncratic spikes (Wagner +34%, Egypt +21%); a BOJ carry-unwind forcing global deleveraging hits high-beta brokers, history is off-channel.
Historical precedent — what analogous events actually did
Across 33 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 |
|---|---|---|---|---|---|---|
| CNY CNY | SHORT | -0.7% · 5d -0.4% | 83% | 22 | 0.58 | ✓ matches cascade |
| High-yield credit HYG | SHORT | -0.5% · 5d -0.1% | 75% | 21 | 0.38 | ✓ matches cascade |
| ARM ARM | SHORT | -3.7% · 5d -7.7% | 75% | 4 | 0.33 | ✓ matches cascade |
| JPM JPM | SHORT | -2.2% · 5d -1.0% | 68% | 33 | 0.31 | ✓ matches cascade |
| AMD AMD | SHORT | -0.9% · 5d -2.6% | 66% | 33 | 0.29 | ✓ matches cascade |
| AVGO AVGO | LONG | +2.3% · 5d -1.6% ↺ fades | 66% | 21 | 0.28 | ⚠ differs |
| TRY TRY | SHORT | -5.4% · 5d -0.8% | 63% | 22 | 0.25 | ✓ matches cascade |
| XLF XLF | SHORT | -0.1% · 5d -0.1% | 62% | 23 | 0.22 | ✓ matches cascade |
| XLK XLK | SHORT | -0.2% · 5d -0.9% | 65% | 23 | 0.21 | ✓ matches cascade |
| GBPUSD GBPUSD | SHORT | -0.5% · 5d -0.5% | 61% | 22 | 0.18 | ✓ matches cascade |
| INR INR | SHORT | -0.5% · 5d -0.5% | 59% | 22 | 0.17 | ✓ matches cascade |
| EURUSD EURUSD | SHORT | -0.9% · 5d -0.8% | 61% | 22 | 0.17 | ✓ matches cascade |
| COIN COIN | LONG | +5.7% · 5d +1.8% | 60% | 10 | 0.16 | ⚠ differs |
| HOOD HOOD | LONG | +5.0% · 5d -0.9% ↺ fades | 60% | 10 | 0.16 | ⚠ differs |
Why this probability
BOJ normalizing but surprise jump to 1.5% with carry detonation is aggressive for 6mo. A base‑rate‑anchored prior, continuously scored against what actually happens — not a forecast.