What if Hong Kong's dollar peg comes under siege?
Cleanest move is local: defending the 7.85 peg drains HKD liquidity and spikes HIBOR, which crushes rate-sensitive HK developers and HSI property names, not global crypto/SPX as the cascade leads with. Rhymes with the 1997-98 Asian-crisis peg defense (and the 2018-19 outflow squeeze) when HIBOR spikes hammered Hong Kong property. Transmission: mainland capital-flow direction sets the pressure; a peg defense tightens into China weakness. Forward angle: with US rates now falling, carry no longer punishes the peg the way 2022-23 did, so the bigger risk is political-driven flight, not pure rate arbitrage.
Every number ships with its receipt — the odds, the range, the precedents, and a public grade at Reality Check. The statistical machinery that produces it is proprietary.
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 0–6 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. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. Sustained capital outflows force the HKMA to drain liquidity defending the 7.85 peg, spiking HIBOR and crushing property. The trigger decomposes into signed root‑shocks — Credit spreads ▲ · Financial conditions ▲ · Risk appetite ▼ — which propagate through our causal graph to the markets below.