What if China dumped its US Treasury holdings as a weapon?
If China weaponizes its Treasury stock, the long end sells hardest (30y > 10y) on fading reserve demand, the dollar softens, and gold/Bitcoin bid as non-sovereign reserve hedges — the cleanest single chain is bear-steepener plus weaker DXY. The template is the Feb-2022 reserve freeze and the 1971 Nixon shock, both reserve-confidence regime breaks. Skeptic's note: China selling tanks the value of its own remaining holdings and pushes CNY up against its export interest, so a full dump is self-limiting — fade the most extreme yield overshoot.
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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. China weaponizes its Treasury holdings, selling aggressively into the market. The trigger decomposes into signed root‑shocks — Dollar/reserve confidence ▼ — which propagate through our causal graph to the markets below.