What if the Fed restarts quantitative easing?
QE restart to backstop disorderly markets: credit spreads tighten, front-end/real yields fall, and high-beta (Nasdaq, crypto) rallies on the liquidity backstop. The rhyme is Mar-2020 unlimited QE and the post-SVB BTFP — spreads snapped tighter and risk V-bottomed. Skeptic's note: QE restarts because something broke, so spreads gap wider before the backstop works — the playbook is to buy the policy-response bottom, not the pre-announcement panic; balance-sheet expansion is the floor, but only after the stress that forced it.
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-on shock. The Fed restarts balance-sheet expansion / QE to backstop disorderly markets. The trigger decomposes into signed root‑shocks — Fed policy path ▼ · Financial conditions ▼ — 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 | ▲ +2.7% hist -5.24–+15.32% · other way -6.44% (n=9) |
| 2 | Solana SOLon Hyperliquid 📈 chart | Crypto | ▲ +1.9% hist -3.84–+10.25% · other way +19.62% (n=5) |
| 3 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▲ +1.6% hist +0.28–+1.53% · other way +0.84% (n=10) |
| 4 | Bitcoin BTCon Hyperliquid 📈 chart | Crypto | ▲ +1.5% hist +0.12–+1.8% · other way -7.27% (n=7) |
| 5 | Ether ETHon Hyperliquid 📈 chart | Crypto | ▲ +1.4% hist -0.09–+2.12% · other way +1.26% (n=5) |
| 6 | Tech sector XLK 📈 chart | Equity | ▲ +1.2% hist +0.01–+1.68% · other way +0.64% (n=9) |
| 7 | Hyperliquid (HYPE) HYPEon Hyperliquid | Crypto | ▲ +1.2% model prior · unmeasured |
| 8 | Volatility (VIX) VIXon Hyperliquid 📈 chart | Vol | ▼ -0.9% hist -1.49–+2.09% · other way +1.09% (n=10) |
| 9 | Coinbase COINon Hyperliquid 📈 chart | Equity | ▲ +0.9% hist -3.62–+8.4% · other way +16.88% (n=4) |
| 10 | S&P 500 SPXon Hyperliquid 📈 chart | Index | ▲ +0.8% hist -0.19–+1.95% · other way -3.34% (n=12) |
| 11 | High-yield credit HYG 📈 chart | Rate | ▲ +0.7% hist -0.09–+0.41% · other way +0.07% (n=8) |
| 12 | Gold XAUon Hyperliquid 📈 chart | Commodity | ▲ +0.7% hist -0.27–+0.5% · other way -1.66% (n=9) |
| 13 | Financials XLF 📈 chart | Equity | ▲ +0.6% hist -0.03–+0.49% · other way -0.7% (n=9) |
| 14 | US dollar (DXY) DXYon Hyperliquid 📈 chart | FX | ▼ -0.6% hist -0.4–-0.16% · other way +1.76% (n=12) |
Probable recommendation
Why we may diverge from history
Trust the cascade long on XHB/TRY: their short history is stale — XHB leans on 2007-08 Lehman/BNP windows and TRY on the 2021 lira blowup, none comparable to a modern QE-restart liquidity surge.
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 |
|---|---|---|---|---|---|---|
| ARM ARM | SHORT | -0.2% · 5d -7.6% | 71% | 13 | 0.35 | ⚠ differs |
| SPX SPX | LONG | +1.4% · 5d +0.9% | 67% | 40 | 0.32 | ✓ matches cascade |
| QCOM QCOM | SHORT | -1.7% · 5d -1.5% | 71% | 40 | 0.30 | ⚠ differs |
| TSM TSM | LONG | +3.0% · 5d -0.9% ↺ fades | 64% | 40 | 0.26 | ✓ matches cascade |
| SMH SMH | LONG | +1.6% · 5d -0.2% ↺ fades | 62% | 40 | 0.22 | ✓ matches cascade |
| JPM JPM | LONG | +1.1% · 5d -0.2% ↺ fades | 62% | 40 | 0.21 | ✓ matches cascade |
| High-yield credit HYG | SHORT | -0.3% · 5d +0.0% ↺ fades | 63% | 39 | 0.19 | ⚠ differs |
| 10y yield DGS10 | LONG | +7bp · 5d +0bp | 62% | 40 | 0.19 | ⚠ differs |
| EURUSD EURUSD | LONG | +0.3% · 5d +0.2% | 63% | 39 | 0.19 | ✓ matches cascade |
| MRVL MRVL | LONG | +4.7% · 5d -1.6% ↺ fades | 58% | 40 | 0.14 | ✓ matches cascade |
| Gold XAU | SHORT | -0.5% · 5d -0.5% | 58% | 40 | 0.13 | ⚠ differs |
| MU MU | LONG | +2.0% · 5d -1.2% ↺ fades | 58% | 40 | 0.13 | ✓ matches cascade |
| INR INR | SHORT | -0.2% · 5d -0.1% | 58% | 39 | 0.12 | ⚠ differs |
| KRW KRW | SHORT | -0.3% · 5d +0.0% ↺ fades | 58% | 39 | 0.12 | ⚠ differs |
Why this probability
QE restart requires disorderly markets; happens only in crises but 3yr window raises odds. A base‑rate‑anchored prior, continuously scored against what actually happens — not a forecast.