What if EM real-rate compression rally as inflation falls faster than rates?
Disinflation outpaces rate cuts across EM, so high real yields draw inflows even as nominal rates ease, rallying local bonds and lifting the currencies.
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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. Disinflation outpaces rate cuts across EM, so high real yields draw inflows even as nominal rates ease, rallying local bonds and lifting the currencies. The trigger decomposes into signed root‑shocks — EM currencies ▲ · FX carry appetite ▲ · Inflation expectations ▼ · Real yields ▲ · Risk appetite ▲ — which propagate through our causal graph to the markets below.