What if EM central bank hikes pre-emptively, out-hawking the Fed?
An EM authority front-runs the Fed with a surprise hike to protect its currency and credibility, lifting its real-rate premium and FX while cooling local growth, a credibility-positive, risk-mixed move.
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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 6–18 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 mixed shock. An EM authority front-runs the Fed with a surprise hike to protect its currency and credibility, lifting its real-rate premium and FX while cooling local growth, a credibility-positive, risk-mixed move. The trigger decomposes into signed root‑shocks — EM currencies ▲ · FX carry appetite ▲ · Credit spreads ▼ · Real yields ▲ · Risk appetite ▼ — which propagate through our causal graph to the markets below.