What if a commercial-real-estate debt spiral hit regional banks?
A CRE debt spiral hits regional-bank loan books and office/retail REITs as maturities reprice into higher rates and lower occupancy — the clean read is wider HY spreads and financials underperformance, concentrated in regional names with CRE exposure. Rhymes with the 2023 office-CRE stress and the early-1990s S&L/CRE bust. Forward angle: the wall of 2025-26 maturities is the catalyst; with banks holding loans at par and extend-and-pretend running, the loss recognition is slow — trade the regional-bank/office-REIT basket, not the broad index.
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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. A commercial-real-estate debt spiral hits regional banks and REITs. The trigger decomposes into signed root‑shocks — Credit spreads ▲ — which propagate through our causal graph to the markets below.