What if Brazil abandons its fiscal anchor?
Brazil abandoning its fiscal anchor is a classic EM blowup — long real yields and BRL sell off hard, and the trade is short BRL / receive nothing until the central bank hikes to defend. Rhymes with Brazil's 2015 fiscal-crisis downgrade to junk and the Dilma-era real collapse past 4 per dollar. Brazil is a commodity exporter funded heavily by foreign portfolio flows; the forward angle is that high real carry can attract dip-buyers fast once the BCB responds, but the crypto/Nasdaq spillover in the cascade is overstated — this is largely a local rates/FX event.
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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 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. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. Brasilia abandons its fiscal framework, sending real yields and the currency into a tailspin. The trigger decomposes into signed root‑shocks — Credit spreads ▲ · EM currencies ▼ · Financial conditions ▲ · Risk appetite ▼ — which propagate through our causal graph to the markets below.