What if Europe launches a common-defence Eurobond and floods supply?
A common-defence Eurobond facility is a supply-glut plus defense-capex trade: euro long-end and global duration cheapen on issuance while defense primes (Lockheed, Northrop, RTX) rally on order-book expansion. Rhymes with the 2020 NextGenEU/SURE joint issuance that markets absorbed without a spread crisis. The transmission is mutualized EU credit and the defense supply chain; the forward angle is that a permanent joint-bond precedent is a structural euro-positive long-term even as the near-term supply weighs — but the modeled VIX +5% and Nasdaq -2.3% look too risk-off for what is fundamentally an orderly issuance event, not a tail shock.
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 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. Europe launches a jointly-guaranteed common-defence Eurobond facility, unleashing hundreds of billions in new mutualised issuance and a supply glut. The trigger decomposes into signed root‑shocks — Defense spending ▲ · Real yields ▲ · Credit spreads ▲ — which propagate through our causal graph to the markets below.