What if European high-yield default rates climb toward 6%?
European high-yield default rates climb toward 6% as energy costs, weak demand, and tight ECB policy hit a speculative-grade cohort with limited refinancing options.
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. European high-yield default rates climb toward 6% as energy costs, weak demand, and tight ECB policy hit a speculative-grade cohort with limited refinancing options. The trigger decomposes into signed root‑shocks — Credit spreads ▲ · European energy ▲ · Recession signal ▲ · Risk appetite ▼ — 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 | MicroStrategy MSTRon Hyperliquid 📈 chart | Equity | ▼ -1.5% hist -3.81–+0.5% · other way +25.6% (n=12) |
| 2 | Solana SOLon Hyperliquid 📈 chart | Crypto | ▼ -1.2% hist -15.03–+7.29% · other way -1.05% (n=11) |
| 3 | High-yield credit HYG 📈 chart | Rate | ▼ -1.0% hist -0.59–-0.17% · other way -0.06% (n=12) |
| 4 | Hyperliquid (HYPE) HYPEon Hyperliquid | Crypto | ▼ -1.0% model prior · unmeasured |
| 5 | Volatility (VIX) VIXon Hyperliquid 📈 chart | Vol | ▲ +0.9% hist -0.4–+2.09% · other way -10.27% (n=12) |
| 6 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▼ -0.9% hist -1.16–-0.04% · other way +0.22% (n=12) |
| 7 | Financials XLF 📈 chart | Equity | ▼ -0.9% hist -1.39–+0.07% · other way +0.51% (n=12) |
| 8 | Ether ETHon Hyperliquid 📈 chart | Crypto | ▼ -0.9% hist -2.83–+1.28% · other way +4.96% (n=11) |
| 9 | Bitcoin BTCon Hyperliquid 📈 chart | Crypto | ▼ -0.8% hist -3.12–+1.27% · other way +7.35% (n=11) |
| 10 | S&P 500 SPXon Hyperliquid 📈 chart | Index | ▼ -0.7% hist -0.96–+0.03% · other way -0.94% (n=12) |
| 11 | Tech sector XLK 📈 chart | Equity | ▼ -0.7% hist -0.58–+0.31% · other way +0.23% (n=12) |
| 12 | JPMorgan JPM 📈 chart | Equity | ▼ -0.6% hist -1.85–+0.2% · other way +1.31% (n=12) |
| 13 | Coinbase COINon Hyperliquid 📈 chart | Equity | ▼ -0.6% hist -6.7–+7.49% · other way +22.29% (n=11) |
| 14 | Semiconductors SMHon Hyperliquid 📈 chart | Equity | ▼ -0.4% hist -0.72–+1.8% · other way +0.78% (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 |
|---|---|---|---|---|---|---|
| High-yield credit HYG | SHORT | -0.2% · 5d -0.3% | 73% | 26 | 0.45 | ✓ matches cascade |
| SOL SOL | SHORT | -14.3% · 5d -13.1% | 86% | 7 | 0.44 | ✓ matches cascade |
| JPM JPM | SHORT | -1.4% · 5d -1.9% | 69% | 36 | 0.34 | ✓ matches cascade |
| CL CL | SHORT | -1.8% · 5d -2.0% | 67% | 30 | 0.28 | ✓ matches cascade |
| COIN COIN | LONG | +8.6% · 5d +6.1% | 67% | 6 | 0.26 | ⚠ differs |
| AVGO AVGO | LONG | +3.5% · 5d +0.1% | 63% | 19 | 0.23 | ⚠ differs |
| Bitcoin BTC | SHORT | -2.6% · 5d -4.5% | 64% | 11 | 0.22 | ✓ matches cascade |
| SMH SMH | LONG | +1.8% · 5d -0.3% ↺ fades | 63% | 30 | 0.22 | ⚠ differs |
| MSTR MSTR | SHORT | -2.8% · 5d -3.2% | 63% | 30 | 0.21 | ✓ matches cascade |
| XLF XLF | SHORT | -0.9% · 5d -1.4% | 60% | 30 | 0.18 | ✓ matches cascade |
| 10y yield DGS10 | SHORT | -12bp · 5d -3bp | 60% | 40 | 0.17 | · |
| NVDA NVDA | LONG | +3.7% · 5d -2.1% ↺ fades | 60% | 30 | 0.16 | ⚠ differs |
| TSM TSM | LONG | +1.3% · 5d -0.8% ↺ fades | 57% | 30 | 0.10 | ⚠ differs |
| US dollar DXY | LONG | +0.2% · 5d +0.1% | 55% | 40 | 0.09 | · |