What if inflation overshoots de-anchor euro-area expectations above 3% and raise the rate regime?
Repeated inflation overshoots de-anchor euro-area medium-term inflation expectations above 3%, forcing a structurally higher policy-rate regime and a persistent growth penalty.
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. Repeated inflation overshoots de-anchor euro-area medium-term inflation expectations above 3%, forcing a structurally higher policy-rate regime and a persistent growth penalty. The trigger decomposes into signed root‑shocks — Inflation expectations ▲ · Inflation surprise ▲ · Real yields ▲ · 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 | Tech sector XLK 📈 chart | Equity | ▼ -1.1% hist -0.68–-0.38% · other way -0.47% (n=12) |
| 2 | 30y Treasury yield DGS30 📈 chart | Rate | ▲ +10bp hist +0.83–+11.21% · other way +5.4% (n=12) |
| 3 | MicroStrategy MSTRon Hyperliquid 📈 chart | Equity | ▼ -1.0% hist -1.75–+2.04% · other way +31.9% (n=12) |
| 4 | Gold XAUon Hyperliquid 📈 chart | Commodity | ▼ -0.9% hist -0.69–+0.08% · other way +0.47% (n=12) |
| 5 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▼ -0.9% hist -0.93–-0.13% · other way -0.56% (n=12) |
| 6 | 10y Treasury yield DGS10 📈 chart | Rate | ▲ +9bp hist +2.69–+6.57% · other way +6.3% (n=12) |
| 7 | Bitcoin BTCon Hyperliquid 📈 chart | Crypto | ▼ -0.6% hist -0.59–+0.35% · other way +7.54% (n=12) |
| 8 | Arm ARMon Hyperliquid 📈 chart | Equity | ▼ -0.5% hist -7.44–+1.36% · other way +0.73% (n=11) |
| 9 | Homebuilders XHB 📈 chart | Equity | ▼ -0.5% hist -0.37–-0.06% · other way -0.42% (n=12) |
| 10 | Solana SOLon Hyperliquid 📈 chart | Crypto | ▼ -0.5% hist -5.21–+1.8% · other way -0.48% (n=12) |
| 11 | Hyperliquid (HYPE) HYPEon Hyperliquid | Crypto | ▼ -0.4% model prior · unmeasured |
| 12 | Robinhood HOODon Hyperliquid 📈 chart | Equity | ▼ -0.4% hist -2.31–+4.28% · other way +19.04% (n=12) |
| 13 | S&P 500 SPXon Hyperliquid 📈 chart | Index | ▼ -0.4% hist -2.05–+0.76% · other way +1.48% (n=12) |
| 14 | Ether ETHon Hyperliquid 📈 chart | Crypto | ▼ -0.4% hist -4.45–+1.23% · other way +4.46% (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 |
|---|---|---|---|---|---|---|
| XLF XLF | LONG | +1.3% · 5d +0.3% | 73% | 33 | 0.39 | ⚠ differs |
| ARM ARM | SHORT | -6.2% · 5d -6.5% | 70% | 27 | 0.30 | ✓ matches cascade |
| ETH ETH | SHORT | -3.9% · 5d -5.2% | 63% | 31 | 0.19 | ✓ matches cascade |
| NDX NDX | SHORT | -0.4% · 5d -0.9% | 59% | 34 | 0.13 | ✓ matches cascade |
| Volatility VIX | LONG | +3.4% · 5d +8.7% | 56% | 34 | 0.12 | ✓ matches cascade |
| 30y yield DGS30 | LONG | +6bp · 5d +4bp | 55% | 38 | 0.10 | ✓ matches cascade |
| SOL SOL | SHORT | -4.7% · 5d -6.5% | 58% | 30 | 0.10 | ✓ matches cascade |
| INR INR | SHORT | -0.1% · 5d +0.4% ↺ fades | 57% | 33 | 0.10 | ✓ matches cascade |
| USDJPY USDJPY | SHORT | -0.6% · 5d -0.0% | 54% | 33 | 0.08 | ⚠ differs |
| GBPUSD GBPUSD | SHORT | -0.2% · 5d -0.1% | 54% | 33 | 0.07 | ✓ matches cascade |
| TRY TRY | SHORT | -2.7% · 5d +0.7% ↺ fades | 54% | 33 | 0.07 | ✓ matches cascade |
| Gold XAU | LONG | +0.5% · 5d -0.7% ↺ fades | 54% | 33 | 0.06 | ⚠ differs |
| Bitcoin BTC | LONG | +0.6% · 5d -2.8% ↺ fades | 53% | 32 | 0.04 | ⚠ differs |
| HOOD HOOD | LONG | +4.4% · 5d +0.1% | 52% | 30 | 0.03 | ⚠ differs |