What if the Fed swaps its 2% goal for a nominal-GDP target?
Switching to an NGDP-level rule is a regime change that lifts breakevens while capping reals: the curve bull-steepens as the market prices tolerated overshoot, and gold/long-duration assets should bid — the supplied cascade under-reacts. No clean modern analogue; the nearest is the 2020 FAIT average-inflation shift, which re-steepened the curve and weakened the dollar. Forward: an explicit level target front-loads catch-up inflation, a bigger breakeven move than FAIT delivered.
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. The Fed abandons 2% inflation targeting for a nominal-GDP-level rule, repricing long-end real yields and inflation breakevens overnight. The trigger decomposes into signed root‑shocks — Inflation expectations ▲ · Real yields ▼ · Yield-curve slope ▲ — 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 | Solana SOLon Hyperliquid 📈 chart | Crypto | ▼ -0.2% hist -2.45–+1.09% · other way -1.22% (n=2) |
| 2 | US dollar (DXY) DXYon Hyperliquid 📈 chart | FX | ▲ +0.2% hist -0.03–+0.39% · other way +0.79% (n=10) |
| 3 | Financials XLF 📈 chart | Equity | ▲ +0.2% hist -0.44–+1.85% · other way +0.08% (n=10) |
| 4 | 2y Treasury yield DGS2 | Rate | ▲ +3bp model prior · unmeasured |
| 5 | USD/JPY USDJPYon Hyperliquid 📈 chart | FX | ▲ +0.2% hist +0.06–+0.15% · other way -0.21% (n=10) |
| 6 | EUR/USD EURUSDon Hyperliquid 📈 chart | FX | ▼ -0.2% hist -0.67–+0.17% · other way -1.16% (n=8) |
| 7 | Ether ETHon Hyperliquid 📈 chart | Crypto | ▼ -0.1% hist -1.64–+3.04% · other way -1.47% (n=2) |
| 8 | GBP/USD GBPUSDon Hyperliquid 📈 chart | FX | ▼ -0.2% hist -0.67–+0.17% · other way -1.06% (n=8) |
| 9 | Turkish lira TRY 📈 chart | FX | ▼ -0.2% hist -2.32–+1.06% · other way +1.31% (n=8) |
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 | +1.6% · 5d -0.0% ↺ fades | 64% | 28 | 0.26 | ✓ matches cascade |
| USDJPY USDJPY | LONG | +0.0% · 5d +0.2% | 59% | 29 | 0.16 | ✓ matches cascade |
| GBPUSD GBPUSD | SHORT | -0.6% · 5d +0.2% ↺ fades | 57% | 28 | 0.13 | ✓ matches cascade |
| Gold XAU | SHORT | -1.4% · 5d -0.6% | 57% | 28 | 0.13 | · |
| High-yield credit HYG | LONG | +0.4% · 5d +0.1% | 57% | 28 | 0.11 | · |
| Volatility VIX | SHORT | -0.6% · 5d +1.9% ↺ fades | 56% | 36 | 0.09 | · |
| EURUSD EURUSD | SHORT | -0.5% · 5d +0.1% ↺ fades | 54% | 28 | 0.06 | ✓ matches cascade |
| US dollar DXY | LONG | +0.2% · 5d +0.0% | 53% | 40 | 0.05 | ✓ matches cascade |
| SOL SOL | SHORT | -2.3% · 5d -7.7% | 48% | 21 | 0.00 | ✓ matches cascade |
| ETH ETH | LONG | +3.1% · 5d -2.4% ↺ fades | 50% | 22 | 0.00 | ⚠ differs |
| TRY TRY | SHORT | -2.2% · 5d +1.0% ↺ fades | 46% | 28 | 0.00 | ✓ matches cascade |
| Bitcoin BTC | LONG | +1.1% · 5d -4.2% ↺ fades | 50% | 24 | 0.00 | · |
| 10y yield DGS10 | SHORT | -5bp · 5d +0bp ↺ fades | 45% | 40 | 0.00 | · |
Why this probability
Regime shift to NGDP-level targeting is structural, near-unprecedented; very low in 18mo. A base‑rate‑anchored prior, continuously scored against what actually happens — not a forecast.