What if an institution running unhedged foreign-bond carry is forced to liquidate into a yen-strengthening window?
An institution that ran unhedged foreign-bond carry to escape hedging costs is forced to liquidate into a yen-strengthening, yield-rising window, taking compounded FX and price losses that breach internal risk limits.
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. An institution that ran unhedged foreign-bond carry to escape hedging costs is forced to liquidate into a yen-strengthening, yield-rising window, taking compounded FX and price losses that breach internal risk limits. The trigger decomposes into signed root‑shocks — FX carry appetite ▼ · Dollar/reserve confidence ▼ · Real yields ▲ · 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 | Tech sector XLK 📈 chart | Equity | ▼ -0.9% hist -0.79–-0.38% · other way +0.75% (n=12) |
| 2 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▼ -0.9% hist -0.56–-0.3% · other way +0.63% (n=12) |
| 3 | 30y Treasury yield DGS30 📈 chart | Rate | ▲ +8bp hist -5.21–+4.75% · other way +1.3% (n=12) |
| 4 | 10y Treasury yield DGS10 📈 chart | Rate | ▲ +7bp hist -7.03–+5.1% · other way +2.2% (n=12) |
| 5 | S&P 500 SPXon Hyperliquid 📈 chart | Index | ▼ -0.5% hist -0.47–+0.94% · other way +0.24% (n=12) |
| 6 | USD/JPY USDJPYon Hyperliquid 📈 chart | FX | ▼ -0.5% hist -0.71–+0.61% · other way +0.37% (n=12) |
| 7 | Solana SOLon Hyperliquid 📈 chart | Crypto | ▼ -0.4% hist -0.53–-0.03% · other way -3.1% (n=10) |
| 8 | Gold XAUon Hyperliquid 📈 chart | Commodity | ▲ +0.4% hist -1.45–+1.32% · other way +0.63% (n=12) |
| 9 | Hyperliquid (HYPE) HYPEon Hyperliquid | Crypto | ▼ -0.4% model prior · unmeasured |
| 10 | Semiconductors SMHon Hyperliquid 📈 chart | Equity | ▼ -0.4% hist -0.44–-0.03% · other way +3.44% (n=12) |
| 11 | US dollar (DXY) DXYon Hyperliquid 📈 chart | FX | ▼ -0.4% hist -0.39–-0.05% · other way +1.04% (n=12) |
| 12 | Volatility (VIX) VIXon Hyperliquid 📈 chart | Vol | ▲ +0.4% hist -0.43–+0.47% · other way -7.07% (n=12) |
| 13 | Ether ETHon Hyperliquid 📈 chart | Crypto | ▼ -0.3% hist -7.41–+5.5% · other way +2.79% (n=11) |
| 14 | EUR/USD EURUSDon Hyperliquid 📈 chart | FX | ▲ +0.4% hist -0.57–+0.71% · other way -1.12% (n=12) |
Probable recommendation
Historical precedent — what analogous events actually did
Across 30 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 |
|---|---|---|---|---|---|---|
| AMD AMD | SHORT | -3.2% · 5d -3.0% | 73% | 25 | 0.42 | ✓ matches cascade |
| AVGO AVGO | LONG | +2.9% · 5d -1.1% ↺ fades | 71% | 14 | 0.39 | ⚠ differs |
| MU MU | SHORT | -7.8% · 5d -4.9% | 69% | 25 | 0.36 | ✓ matches cascade |
| SOL SOL | SHORT | -0.2% · 5d -6.7% | 71% | 7 | 0.35 | ✓ matches cascade |
| High-yield credit HYG | SHORT | -0.6% · 5d -0.1% | 71% | 14 | 0.34 | ✓ matches cascade |
| SPX SPX | LONG | +1.0% · 5d +0.4% | 65% | 28 | 0.25 | ⚠ differs |
| HOOD HOOD | SHORT | -2.0% · 5d -2.8% | 67% | 6 | 0.23 | ✓ matches cascade |
| 30y yield DGS30 | SHORT | -8bp · 5d -3bp | 64% | 26 | 0.22 | ⚠ differs |
| US dollar DXY | SHORT | -0.2% · 5d +0.1% ↺ fades | 61% | 28 | 0.22 | ✓ matches cascade |
| 10y yield DGS10 | SHORT | -9bp · 5d -4bp | 63% | 28 | 0.21 | ⚠ differs |
| MSTR MSTR | SHORT | -8.4% · 5d -5.4% | 62% | 16 | 0.19 | ⚠ differs |
| ETH ETH | SHORT | -7.6% · 5d -7.5% | 62% | 8 | 0.17 | ✓ matches cascade |
| TSM TSM | SHORT | -1.4% · 5d -3.3% | 59% | 17 | 0.14 | ✓ matches cascade |
| GBPUSD GBPUSD | SHORT | -0.2% · 5d -0.5% | 57% | 14 | 0.12 | ⚠ differs |