What if Italy's bond spread over Germany tops 250 basis points?
Meloni-Brussels deficit clash with BTP-Bund through 250bp hits Italian banks (Intesa/UniCredit) via the sovereign doom loop — but the +4.4% VIX / -1.9% Nasdaq overstates US transmission. Rhymes with the 2018 Lega-M5S budget standoff that pushed BTP-Bund toward 300bp and crushed Italian financials before the ECB backstop calmed it. Transmission: Italian bank holdings of BTPs are the loop; TPI scrutiny is the circuit-breaker. Forward angle: TPI's existence caps redenomination tail risk, so a 250bp print is a tactical bank-short, not a 2011-style crisis.
Every number ships with its receipt — the odds, the range, the precedents, and a public grade at Reality Check. The statistical machinery that produces it is proprietary.
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. Meloni clashes with Brussels over deficit, triggers ECB Transmission Protection scrutiny and bank selloff. The trigger decomposes into signed root‑shocks — Credit spreads ▲ · Geopolitical risk ▲ · Risk appetite ▼ — which propagate through our causal graph to the markets below.