What if a US 10-year Treasury auction fails to clear?
A genuinely failed 10y auction is a tail event that forces dealers to warehouse supply, spiking real yields and draining funding liquidity — duration assets and HY credit sell together as repo tightens. Closest analogue is the March 2020 'dash for cash' when even Treasuries sold off and the Fed had to backstop the market. The transmission is dealer balance-sheet and repo; the forward twist is that an actual fail likely triggers an SRF/standing-facility intervention within hours, so the violent move is short-lived but the vol is real.
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 Tail risk 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 US 10-year auction fails to clear, forcing primary dealers to absorb unprecedented supply. The trigger decomposes into signed root‑shocks — Credit spreads ▲ · Financial conditions ▲ · Real yields ▲ — 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 | ▼ -2.0% hist -5.17–+0.63% · other way +27.47% (n=12) |
| 2 | Tech sector XLK 📈 chart | Equity | ▼ -1.3% hist -0.93–-0.28% · other way +0.09% (n=12) |
| 3 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▼ -1.2% hist -1.29–-0.17% · other way +0.06% (n=12) |
| 4 | Solana SOLon Hyperliquid 📈 chart | Crypto | ▼ -1.3% hist -13.24–+0.54% · other way -1.04% (n=11) |
| 5 | Bitcoin BTCon Hyperliquid 📈 chart | Crypto | ▼ -1.1% hist -4.48–+1.05% · other way +6.05% (n=11) |
| 6 | High-yield credit HYG 📈 chart | Rate | ▼ -1.0% hist -0.82–-0.16% · other way -0.28% (n=12) |
| 7 | Ether ETHon Hyperliquid 📈 chart | Crypto | ▼ -0.9% hist -9.43–+1.79% · other way +4.87% (n=11) |
| 8 | 30y Treasury yield DGS30 📈 chart | Rate | ▲ +8bp hist -6.36–+6.34% · other way +8.8% (n=12) |
| 9 | S&P 500 SPXon Hyperliquid 📈 chart | Index | ▼ -0.7% hist -0.62–-0.19% · other way +0.04% (n=12) |
| 10 | Coinbase COINon Hyperliquid 📈 chart | Equity | ▼ -0.8% hist -4.33–+1.31% · other way +21.75% (n=11) |
| 11 | Volatility (VIX) VIXon Hyperliquid 📈 chart | Vol | ▲ +0.7% hist -1.69–+4.31% · other way -0.58% (n=12) |
| 12 | Financials XLF 📈 chart | Equity | ▼ -0.7% hist -0.4–-0.16% · other way +0.01% (n=12) |
| 13 | 10y Treasury yield DGS10 📈 chart | Rate | ▲ +7bp hist -7.6–+8.25% · other way +9.1% (n=12) |
| 14 | Hyperliquid (HYPE) HYPEon Hyperliquid | Crypto | ▼ -0.7% model prior · unmeasured |
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 |
|---|---|---|---|---|---|---|
| SOL SOL | SHORT | -10.0% · 5d -7.8% | 83% | 20 | 0.42 | ✓ matches cascade |
| ARM ARM | SHORT | -6.2% · 5d -5.8% | 71% | 17 | 0.29 | ✓ matches cascade |
| XHB XHB | SHORT | -1.0% · 5d -0.1% | 67% | 36 | 0.29 | ✓ matches cascade |
| ETH ETH | SHORT | -7.8% · 5d -5.6% | 70% | 20 | 0.27 | ✓ matches cascade |
| High-yield credit HYG | SHORT | -0.3% · 5d +0.0% ↺ fades | 66% | 35 | 0.26 | ✓ matches cascade |
| MSTR MSTR | SHORT | -3.8% · 5d -3.3% | 65% | 37 | 0.25 | ✓ matches cascade |
| Gold XAU | LONG | +0.7% · 5d +0.2% | 61% | 37 | 0.20 | ⚠ differs |
| HOOD HOOD | SHORT | -0.8% · 5d -3.2% | 61% | 20 | 0.18 | ✓ matches cascade |
| 30y yield DGS30 | SHORT | -10bp · 5d -3bp | 59% | 40 | 0.16 | ⚠ differs |
| SMH SMH | LONG | +1.2% · 5d -0.9% ↺ fades | 60% | 37 | 0.16 | ⚠ differs |
| Bitcoin BTC | SHORT | -3.6% · 5d -2.1% | 60% | 21 | 0.15 | ✓ matches cascade |
| COIN COIN | SHORT | -3.7% · 5d +1.5% ↺ fades | 57% | 20 | 0.12 | ✓ matches cascade |
| ASML ASML | SHORT | -2.2% · 5d -3.0% | 58% | 37 | 0.12 | ✓ matches cascade |
| XLF XLF | LONG | +0.1% · 5d -1.0% ↺ fades | 56% | 37 | 0.11 | ⚠ differs |
Why this probability
A genuinely failed US 10y auction is essentially unprecedented; dealer backstop prevents it. A base‑rate‑anchored prior, continuously scored against what actually happens — not a forecast.