What if China slides back into outright deflation?
A China deflation relapse (negative CPI, 10th straight deflator drop) is a demand-deficiency signal: copper, Alibaba and the China-growth proxies lead lower, AUD and oil demand soften, global inflation expectations get dragged down. Rhymes with Japan's post-1998 deflation entrenchment more than any acute crash. Forward angle: exported deflation is the cross-asset kicker, cheap Chinese goods cap DM goods CPI, a disinflationary tailwind for DM bonds even as it crushes EM manufacturer margins, this is mixed, not pure risk-off.
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 mixed shock. After CPI briefly turned positive, China slides back into outright deflation with CPI negative and the GDP deflator falling for a tenth straight quarter. The trigger decomposes into signed root‑shocks — China growth ▼ · Inflation surprise ▼ — which propagate through our causal graph to the markets below.