What if a strong dollar and high rates trigger a broad EM corporate default wave?
A broad EM-corporate default wave unfolds as a strong dollar, high global rates and slowing growth shut hard-currency funding, the IMF's recurring systemic-EM concern.
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 1–3 years 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. A broad EM-corporate default wave unfolds as a strong dollar, high global rates and slowing growth shut hard-currency funding, the IMF's recurring systemic-EM concern. The trigger decomposes into signed root‑shocks — US dollar (DXY) ▲ · EM currencies ▼ · Credit spreads ▲ · Recession signal ▲ — 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 | Turkish lira TRY 📈 chart | FX | ▼ -0.9% hist -0.69–+0.38% · other way -0.76% (n=12) |
| 2 | MicroStrategy MSTRon Hyperliquid 📈 chart | Equity | ▼ -0.9% hist -5.33–+1.22% · other way +26.61% (n=12) |
| 3 | High-yield credit HYG 📈 chart | Rate | ▼ -0.8% hist -0.98–-0.03% · other way -0.16% (n=12) |
| 4 | Indian rupee INR 📈 chart | FX | ▼ -0.7% hist -0.78–-0.12% · other way -0.57% (n=12) |
| 5 | Financials XLF 📈 chart | Equity | ▼ -0.7% hist -1.22–+0.1% · other way -0.09% (n=12) |
| 6 | Bitcoin BTCon Hyperliquid 📈 chart | Crypto | ▼ -0.5% hist -6.38–+5.02% · other way +6.05% (n=11) |
| 7 | Volatility (VIX) VIXon Hyperliquid 📈 chart | Vol | ▲ +0.5% hist -1.68–+3.97% · other way -3.49% (n=12) |
| 8 | Chinese yuan CNY 📈 chart | FX | ▼ -0.4% hist -0.45–-0.08% · other way -0.63% (n=12) |
| 9 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▼ -0.4% hist -0.5–-0.04% · other way +0.35% (n=12) |
| 10 | Solana SOLon Hyperliquid 📈 chart | Crypto | ▼ -0.4% hist -18.14–+9.09% · other way -1.04% (n=11) |
| 11 | US dollar (DXY) DXYon Hyperliquid 📈 chart | FX | ▲ +0.4% hist -0.05–+0.66% · other way +1.15% (n=12) |
| 12 | JPMorgan JPM 📈 chart | Equity | ▼ -0.4% hist -1.32–+0.15% · other way +1.78% (n=12) |
| 13 | S&P 500 SPXon Hyperliquid 📈 chart | Index | ▼ -0.3% hist -0.75–+0.14% · other way -0.44% (n=12) |
| 14 | EUR/USD EURUSDon Hyperliquid 📈 chart | FX | ▼ -0.4% hist -1.29–+0.37% · other way -1.26% (n=12) |
Probable recommendation
Historical precedent — what analogous events actually did
Across 28 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 |
|---|---|---|---|---|---|---|
| SOL SOL | SHORT | -17.7% · 5d -13.9% | 100% | 3 | 0.59 | ✓ matches cascade |
| KRW KRW | SHORT | -1.9% · 5d +0.0% ↺ fades | 76% | 21 | 0.50 | ✓ matches cascade |
| JPM JPM | SHORT | -1.0% · 5d -2.1% | 69% | 26 | 0.34 | ✓ matches cascade |
| High-yield credit HYG | SHORT | -0.6% · 5d -0.1% | 68% | 19 | 0.31 | ✓ matches cascade |
| MSTR MSTR | SHORT | -4.4% · 5d -3.6% | 64% | 22 | 0.21 | ✓ matches cascade |
| CL CL | SHORT | -2.6% · 5d -2.1% | 64% | 22 | 0.20 | ✓ matches cascade |
| ETH ETH | SHORT | -6.7% · 5d -1.9% | 67% | 3 | 0.18 | ✓ matches cascade |
| XLF XLF | SHORT | -0.8% · 5d -1.5% | 59% | 22 | 0.16 | ✓ matches cascade |
| Bitcoin BTC | SHORT | -6.4% · 5d -1.7% | 60% | 5 | 0.16 | ✓ matches cascade |
| AUD AUD | SHORT | -0.6% · 5d +0.1% ↺ fades | 57% | 21 | 0.14 | ✓ matches cascade |
| 10y yield DGS10 | SHORT | -14bp · 5d -7bp | 57% | 28 | 0.13 | · |
| GBPUSD GBPUSD | SHORT | -0.3% · 5d -0.2% | 57% | 21 | 0.12 | ✓ matches cascade |
| TRY TRY | LONG | +0.8% · 5d +1.2% | 57% | 21 | 0.09 | ⚠ differs |
| XLK XLK | LONG | +0.7% · 5d -0.6% ↺ fades | 55% | 22 | 0.07 | ⚠ differs |