What if the Fed caps long-end yields with yield-curve control?
Long-end cap: YCC to suppress surging long yields rallies the 30y/10y, lifts duration-sensitive tech and gold (a real-rate asset), and eases mortgage rates. The rhyme is BOJ's 2016-2022 YCC regime and the 1940s Fed peg — capping yields supported duration but at the cost of currency/balance-sheet stress. Forward angle: pinning the long end with inflation un-anchored risks a weaker dollar and a steeper breakeven curve, so the durable trade pairs long duration/gold with short USD — the catch is YCC works until the market tests the cap, then the defense balloons the balance sheet.
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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 (electric blue) over time vs the market's (Polymarket, amber), 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. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-on shock. The Fed announces yield-curve control to cap surging long-end yields. The trigger decomposes into signed root‑shocks — Fed policy path ▼ · Real yields ▼ — which propagate through our causal graph to the markets below.