What if trend-following funds flip short across stocks and bonds?
CTAs flipping net short across equities and bonds simultaneously mechanically accelerates a cross-asset drawdown — trend models sell into momentum regardless of valuation, hitting high-beta hardest. Rhymes with Q4-2018 and Aug-2024, when CTA trend reversals added to equity/bond selling. Forward angle: the unusual feature is equities AND bonds both trending down (positive stock-bond correlation), which removes the 60/40 hedge and forces de-risking everywhere at once — a 2022-style correlation regime. Roots (VIX up, risk_appetite negative) capture the systematic-flow trigger well.
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 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. Commodity-trading advisors flip net short across equities and bonds at once, mechanically accelerating a cross-asset drawdown. The trigger decomposes into signed root‑shocks — Volatility (VIX) ▲ · Risk appetite ▼ — which propagate through our causal graph to the markets below.