What if the ECB triggers its anti-fragmentation backstop for Italy?
ECB activating its anti-fragmentation backstop is a stress-then-stabilize event: BTP-Bund spreads were blowing out (the trigger), and the cleanest post-activation trade is fading peripheral spread widening while banks and HY stay heavy until the cap is credible. Rhymes with Draghi's 2012 'whatever it takes' and OMT, which crushed spreads once markets believed the backstop. The transmission is core-bank exposure to periphery; the forward angle is that TPI's conditionality is untested at scale — the first activation carries headline risk both ways.
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. The ECB activates its anti-fragmentation backstop to cap a spiraling Italian-German spread. The trigger decomposes into signed root‑shocks — Credit spreads ▲ · Fed policy path ▼ · Risk appetite ▼ — which propagate through our causal graph to the markets below.