What if China exports deflation as factory-gate prices collapse?
Chinese export prices down 10% YoY exports deflation and crushes rival-EM manufacturer margins: Alibaba, semis and China-demand proxies lead, the yuan softens and global inflation expectations get dragged lower as cheap goods flood out. Rhymes with the 2015-16 China overcapacity/PPI-deflation wave that pressured global industrials. Forward angle: this is disinflationary for DM importers (bond-friendly) but a direct margin assault on Korea/Taiwan/Vietnam/Mexico exporters, the EM-vs-EM relative trade is the real edge here, not the broad risk-off.
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 6–18 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 mixed shock. Collapsing factory-gate prices send Chinese export prices down 10% YoY, exporting deflation and crushing rival EM manufacturers' margins. The trigger decomposes into signed root‑shocks — China growth ▼ · Inflation surprise ▼ · Trade tension ▲ — 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 | Alibaba BABAon Hyperliquid 📈 chart | Equity | ▼ -1.2% hist -2.71–+0.31% · other way +0.51% (n=9) |
| 2 | Semiconductors SMHon Hyperliquid 📈 chart | Equity | ▼ -1.1% hist -1.25–-0.09% · other way +2.62% (n=10) |
| 3 | Nvidia NVDAon Hyperliquid 📈 chart | Equity | ▼ -1.0% hist -3.48–+0.28% · other way -1.25% (n=10) |
| 4 | TSMC TSMon Hyperliquid 📈 chart | Equity | ▼ -1.0% hist -0.67–-0.02% · other way +8.7% (n=10) |
| 5 | Freeport (copper) FCX 📈 chart | Equity | ▼ -0.9% hist -4.73–+1.34% · other way +3.51% (n=10) |
| 6 | Copper XCUon Hyperliquid 📈 chart | Commodity | ▼ -0.8% hist -1.48–+0.1% · other way +3.34% (n=10) |
| 7 | Chinese yuan CNY 📈 chart | FX | ▼ -0.8% hist -0.87–-0.08% · other way -0.08% (n=10) |
| 8 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▼ -0.8% hist -1.4–+0.15% · other way -0.59% (n=10) |
| 9 | AMD AMDon Hyperliquid 📈 chart | Equity | ▼ -0.8% hist -3.86–+1.12% · other way +4.58% (n=10) |
| 10 | Broadcom AVGOon Hyperliquid 📈 chart | Equity | ▼ -0.8% hist -0.66–+0.21% · other way +2.03% (n=10) |
| 11 | Micron MUon Hyperliquid 📈 chart | Equity | ▼ -0.8% hist -5.31–+1.46% · other way +6.4% (n=10) |
| 12 | Marvell MRVLon Hyperliquid 📈 chart | Equity | ▼ -0.8% hist -2.38–+0.67% · other way +0.4% (n=10) |
| 13 | China internet KWEBon Hyperliquid 📈 chart | Equity | ▼ -0.7% hist -2.9–+0.59% · other way -2.39% (n=9) |
| 14 | ASML ASMLon Hyperliquid 📈 chart | Equity | ▼ -0.7% hist -1.3–+0.15% · other way +2.18% (n=10) |
Probable recommendation
Why we may diverge from history
Trust history long AVGO over the cascade short: but note all four +30% analogues are the single 2025-04 tariff cluster — one regime, not deflation; treat the base rate as thin.
Historical precedent — what analogous events actually did
Across 29 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 |
|---|---|---|---|---|---|---|
| NVDA NVDA | SHORT | -2.6% · 5d -2.4% | 74% | 24 | 0.35 | ✓ matches cascade |
| INTC INTC | SHORT | -2.8% · 5d -3.0% | 66% | 28 | 0.27 | ✓ matches cascade |
| Volatility VIX | SHORT | -1.5% · 5d -1.0% | 65% | 26 | 0.26 | · |
| QCOM QCOM | SHORT | -3.7% · 5d -2.6% | 65% | 26 | 0.23 | ✓ matches cascade |
| XCU XCU | SHORT | -1.0% · 5d -1.5% | 64% | 24 | 0.22 | ✓ matches cascade |
| KWEB KWEB | SHORT | -2.3% · 5d -2.3% | 62% | 24 | 0.22 | ✓ matches cascade |
| BABA BABA | SHORT | -1.9% · 5d -3.8% | 62% | 24 | 0.21 | ✓ matches cascade |
| CNY CNY | SHORT | -0.4% · 5d -0.3% | 60% | 24 | 0.19 | ✓ matches cascade |
| AUD AUD | SHORT | -0.6% · 5d -0.6% | 62% | 24 | 0.18 | ✓ matches cascade |
| MU MU | SHORT | -4.5% · 5d -3.5% | 60% | 28 | 0.17 | ✓ matches cascade |
| US dollar DXY | LONG | +0.4% · 5d -0.1% ↺ fades | 60% | 28 | 0.17 | · |
| TRY TRY | SHORT | -0.6% · 5d +0.0% ↺ fades | 60% | 24 | 0.16 | ✓ matches cascade |
| ARM ARM | SHORT | -5.4% · 5d -5.3% | 62% | 6 | 0.14 | ⚠ differs |
| FCX FCX | SHORT | -4.0% · 5d -2.2% | 57% | 26 | 0.13 | ✓ matches cascade |
Why this probability
Factory-gate deflation persistent; export-price declines exporting deflation already visible mid-2026. A base‑rate‑anchored prior, continuously scored against what actually happens — not a forecast.