What if the CDX/cash-bond basis dislocates violently and dealers cannot warehouse risk?
The CDX IG / cash-bond basis dislocates violently as dealers cannot warehouse risk, repeating the March-2020 ETF-to-NAV and index-basis gaps the Fed cited in launching SMCCF.
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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 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. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. The CDX IG / cash-bond basis dislocates violently as dealers cannot warehouse risk, repeating the March-2020 ETF-to-NAV and index-basis gaps the Fed cited in launching SMCCF. The trigger decomposes into signed root‑shocks — Credit spreads ▲ · Financial conditions ▲ · Risk appetite ▼ · Risk-parity deleveraging ▲ — which propagate through our causal graph to the markets below.