What if Ecuador defaults yet again?
Ecuador's third default is the consequence of an oil slump gutting its dollarized budget, not a cause of one; as a price-taker its default cannot move Brent ~3.6%. The current map has the causation backwards via a large oil-supply shock. This is contained EM credit (Ecuador defaulted in 2008 and 2020 with no global oil impact); the correct shock is idiosyncratic credit with low oil as the trigger, not Ecuador driving crude.
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-off shock. Quito defaults a third time within fifteen years after oil-price slump guts dollarized fiscal accounts. The trigger decomposes into signed root‑shocks — Credit spreads ▲ · Oil demand ▼ — 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 | High-yield credit HYG 📈 chart | Rate | ▼ -0.4% hist -0.37–+0.13% · other way -0.45% (n=8) |
| 2 | Financials XLF 📈 chart | Equity | ▼ -0.3% hist -1.18–+0.25% · other way +2.06% (n=9) |
| 3 | MicroStrategy MSTRon Hyperliquid 📈 chart | Equity | ▼ -0.3% hist -0.32–+0.25% · other way +12.56% (n=9) |
| 4 | JPMorgan JPM 📈 chart | Equity | ▼ -0.2% hist -1.43–+0.26% · other way +9.01% (n=10) |
| 5 | Volatility (VIX) VIXon Hyperliquid 📈 chart | Vol | ▲ +0.2% hist -0.52–+1.3% · other way -6.34% (n=10) |
| 6 | S&P 500 SPXon Hyperliquid 📈 chart | Index | ▼ -0.1% hist -0.41–+0.1% · other way +0.37% (n=12) |
| 7 | Bitcoin BTCon Hyperliquid 📈 chart | Crypto | ▼ -0.1% hist -0.35–+0.04% · other way +4.09% (n=5) |
Probable recommendation
Historical precedent — what analogous events actually did
Across 40 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 |
|---|---|---|---|---|---|---|
| JPM JPM | SHORT | -1.2% · 5d -1.4% | 66% | 40 | 0.31 | ✓ matches cascade |
| Bitcoin BTC | SHORT | -0.2% · 5d -2.9% | 65% | 22 | 0.25 | ✓ matches cascade |
| XLF XLF | SHORT | -0.9% · 5d -1.1% | 62% | 40 | 0.22 | ✓ matches cascade |
| US dollar DXY | LONG | +0.6% · 5d +0.0% | 59% | 40 | 0.17 | · |
| Gold XAU | LONG | +0.6% · 5d +0.1% | 57% | 40 | 0.14 | · |
| 10y yield DGS10 | SHORT | -3bp · 5d +0bp ↺ fades | 58% | 40 | 0.12 | · |
| High-yield credit HYG | LONG | +0.3% · 5d -0.2% ↺ fades | 41% | 40 | 0.00 | ⚠ differs |
| MSTR MSTR | LONG | +0.4% · 5d -4.3% ↺ fades | 47% | 40 | 0.00 | ⚠ differs |
| Volatility VIX | LONG | +1.2% · 5d +0.4% | 47% | 40 | 0.00 | ✓ matches cascade |
| SPX SPX | SHORT | -0.3% · 5d -0.2% | 42% | 40 | 0.00 | ✓ matches cascade |
Why this probability
Ecuador serial defaulter, dollarized fiscal fragile; oil-price-driven miss plausible but not base case. A base‑rate‑anchored prior, continuously scored against what actually happens — not a forecast.