What if US inflation collapses toward outright deflation?
A CPI collapse toward deflation cements aggressive easing; the dominant chain is real yields down, lifting long-duration tech and gold while the front end rallies. Closest real analogue is the 2014-15 disinflation that drove the ECB/SNB into negative rates and crushed bond yields — Bunds and Treasuries rallied hard, gold firmed on lower real rates. Forward risk: outright deflation also signals demand destruction, so risk-on in equities can stall even as duration wins.
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 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. 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 risk-on shock. US CPI collapses toward outright deflation, cementing aggressive easing. The trigger decomposes into signed root‑shocks — Inflation surprise ▼ — 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 | Tech sector XLK 📈 chart | Equity | ▲ +0.8% hist -0.65–+1.4% · other way -1.25% (n=12) |
| 2 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▲ +0.7% hist -0.95–+1.5% · other way -1.27% (n=12) |
| 3 | MicroStrategy MSTRon Hyperliquid 📈 chart | Equity | ▲ +0.7% hist -2.86–+2.36% · other way +12.66% (n=12) |
| 4 | Gold XAUon Hyperliquid 📈 chart | Commodity | ▲ +0.6% hist -1.31–+2.79% · other way +0.57% (n=12) |
| 5 | Bitcoin BTCon Hyperliquid 📈 chart | Crypto | ▲ +0.6% hist -4.81–+3.97% · other way +4.62% (n=12) |
| 6 | 30y Treasury yield DGS30 📈 chart | Rate | ▼ -6bp hist -8.25–+2.03% · other way +4.8% (n=12) |
| 7 | Solana SOLon Hyperliquid 📈 chart | Crypto | ▲ +0.6% hist -0.76–+1.88% · other way +2.95% (n=12) |
| 8 | 10y Treasury yield DGS10 📈 chart | Rate | ▼ -5bp hist -8.27–+1.19% · other way +9.1% (n=12) |
| 9 | Ether ETHon Hyperliquid 📈 chart | Crypto | ▲ +0.4% hist -1.17–+1.86% · other way +6.57% (n=12) |
| 10 | Hyperliquid (HYPE) HYPEon Hyperliquid | Crypto | ▲ +0.3% model prior · unmeasured |
| 11 | Arm ARMon Hyperliquid 📈 chart | Equity | ▲ +0.3% hist -9.55–+10.09% · other way -12.25% (n=7) |
| 12 | S&P 500 SPXon Hyperliquid 📈 chart | Index | ▲ +0.3% hist -0.79–+1.99% · other way -2.55% (n=12) |
| 13 | Robinhood HOODon Hyperliquid 📈 chart | Equity | ▲ +0.3% hist -12.31–+24.67% · other way +7.04% (n=12) |
| 14 | Homebuilders XHB 📈 chart | Equity | ▲ +0.3% hist -1.0–+2.56% · other way +3.24% (n=12) |
Probable recommendation
Why we may diverge from history
Trust the cascade long on BTC/MSTR: history leans on ancient 2001/2014-16 BOJ/SNB ZIRP windows pre-dating crypto's macro beta — stale, non-comparable sample, base rate unreliable for a deflation-easing bid.
Historical precedent — what analogous events actually did
Across 10 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 |
|---|---|---|---|---|---|---|
| HOOD HOOD | LONG | +24.2% · 5d +5.3% | 100% | 2 | 0.75 | ✓ matches cascade |
| XHB XHB | LONG | +2.3% · 5d -0.7% ↺ fades | 88% | 8 | 0.50 | ✓ matches cascade |
| SPX SPX | LONG | +1.8% · 5d +0.7% | 80% | 10 | 0.40 | ✓ matches cascade |
| Volatility VIX | SHORT | -5.6% · 5d -5.4% | 80% | 10 | 0.37 | · |
| SMH SMH | SHORT | -1.9% · 5d -0.7% | 78% | 9 | 0.36 | ⚠ differs |
| Bitcoin BTC | SHORT | -5.5% · 5d -1.8% | 71% | 7 | 0.34 | ⚠ differs |
| MSTR MSTR | SHORT | -3.4% · 5d -5.6% | 70% | 10 | 0.32 | ⚠ differs |
| Gold XAU | LONG | +2.4% · 5d -1.1% ↺ fades | 67% | 9 | 0.30 | ✓ matches cascade |
| High-yield credit HYG | LONG | +0.2% · 5d -0.0% ↺ fades | 71% | 7 | 0.27 | ✓ matches cascade |
| EURUSD EURUSD | SHORT | -1.2% · 5d -0.7% | 62% | 8 | 0.23 | ⚠ differs |
| TRY TRY | LONG | +1.3% · 5d +1.8% | 62% | 8 | 0.18 | ✓ matches cascade |
| US dollar DXY | LONG | +0.8% · 5d +0.1% | 60% | 10 | 0.17 | ⚠ differs |
| 30y yield DGS30 | LONG | +6bp · 5d +2bp | 60% | 10 | 0.16 | ⚠ differs |
| XLK XLK | SHORT | -1.2% · 5d -0.9% | 60% | 10 | 0.14 | ⚠ differs |
Why this probability
Outright deflation scare rare in 6mo; disinflation yes, but not collapse-to-deflation. A base‑rate‑anchored prior, continuously scored against what actually happens — not a forecast.