What if EU carbon permits spike to 200 euros a tonne?
Trade the EU power curve: an ETS reform plus cold snap rocketing carbon to EUR200 lifts marginal-cost power and squeezes utility and heavy-industry margins, feeding euro-area inflation breakevens. Rhymes with the 2021-22 EUA run toward EUR100 alongside the gas crisis that hammered energy-intensive producers. The modeled US Treasury/Fed cascade overstates spillover; transmission is European power, gas-to-coal switching economics, and EUR/USD on the energy-import drag.
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 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. 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 mixed shock. A supply-tightening reform and cold snap rocket EU carbon permits, squeezing utilities and heavy industry margins. The trigger decomposes into signed root‑shocks — European energy ▲ · Inflation surprise ▲ — 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 | EUR/USD EURUSDon Hyperliquid 📈 chart | FX | ▼ -0.3% hist -0.2–-0.08% · other way -0.38% (n=12) |
| 2 | 30y Treasury yield DGS30 📈 chart | Rate | ▲ +2bp hist -2.49–+12.87% · other way -5.1% (n=12) |
| 3 | Gold XAUon Hyperliquid 📈 chart | Commodity | ▼ -0.1% hist -0.38–+0.7% · other way +3.47% (n=12) |
| 4 | 10y Treasury yield DGS10 📈 chart | Rate | ▲ +2bp hist -2.28–+10.07% · other way -8.3% (n=12) |
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 |
|---|---|---|---|---|---|---|
| 30y yield DGS30 | LONG | +11bp · 5d +3bp | 67% | 39 | 0.28 | ✓ matches cascade |
| 10y yield DGS10 | LONG | +8bp · 5d +3bp | 65% | 40 | 0.22 | ✓ matches cascade |
| Volatility VIX | LONG | +3.5% · 5d -1.7% ↺ fades | 57% | 36 | 0.12 | · |
| High-yield credit HYG | SHORT | -0.2% · 5d +0.0% ↺ fades | 58% | 35 | 0.12 | · |
| Gold XAU | LONG | +0.8% · 5d -0.3% ↺ fades | 55% | 35 | 0.09 | ⚠ differs |
| EURUSD EURUSD | SHORT | -0.0% · 5d -0.0% | 53% | 35 | 0.04 | ✓ matches cascade |
| US dollar DXY | LONG | +0.3% · 5d +0.2% | 52% | 40 | 0.04 | · |
| Bitcoin BTC | LONG | +1.2% · 5d -2.3% ↺ fades | 47% | 34 | 0.00 | · |
Why this probability
EU ETS to 200 needs reform+cold snap; prices firm but doubling in 6-18mo is a stretch. A base‑rate‑anchored prior, continuously scored against what actually happens — not a forecast.