What if HY credit spreads snap back 250bp from record-tight levels?
High-yield spreads, compressed to cycle lows, reprice sharply wider as risk premia normalize and refinancing fears return. The credit shock drags equities and lifts volatility in tandem.
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 risk-off shock. High-yield spreads, compressed to cycle lows, reprice sharply wider as risk premia normalize and refinancing fears return. The credit shock drags equities and lifts volatility in tandem. The trigger decomposes into signed root‑shocks — Volatility (VIX) ▲ · Credit spreads ▲ · Recession signal ▲ · 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 | MicroStrategy MSTRon Hyperliquid 📈 chart | Equity | ▼ -1.4% hist -4.09–+0.69% · other way +26.61% (n=12) |
| 2 | Volatility (VIX) VIXon Hyperliquid 📈 chart | Vol | ▲ +1.3% hist -0.29–+0.93% · other way -3.49% (n=12) |
| 3 | Solana SOLon Hyperliquid 📈 chart | Crypto | ▼ -1.1% hist -14.51–+5.08% · other way -1.04% (n=11) |
| 4 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▼ -1.1% hist -0.62–-0.33% · other way +0.35% (n=12) |
| 5 | High-yield credit HYG 📈 chart | Rate | ▼ -1.0% hist -0.88–-0.15% · other way -0.16% (n=12) |
| 6 | Hyperliquid (HYPE) HYPEon Hyperliquid | Crypto | ▼ -0.9% model prior · unmeasured |
| 7 | Bitcoin BTCon Hyperliquid 📈 chart | Crypto | ▼ -0.9% hist -0.96–+0.03% · other way +6.05% (n=11) |
| 8 | Ether ETHon Hyperliquid 📈 chart | Crypto | ▼ -0.8% hist -7.53–+3.93% · other way +4.87% (n=11) |
| 9 | S&P 500 SPXon Hyperliquid 📈 chart | Index | ▼ -0.8% hist -1.08–+0.01% · other way -0.44% (n=12) |
| 10 | Financials XLF 📈 chart | Equity | ▼ -0.7% hist -1.73–+0.23% · other way -0.09% (n=12) |
| 11 | Tech sector XLK 📈 chart | Equity | ▼ -0.6% hist -0.56–+0.31% · other way +0.36% (n=12) |
| 12 | Coinbase COINon Hyperliquid 📈 chart | Equity | ▼ -0.6% hist -3.65–+3.7% · other way +21.75% (n=11) |
| 13 | JPMorgan JPM 📈 chart | Equity | ▼ -0.5% hist -1.23–+0.15% · other way +1.78% (n=12) |
| 14 | Semiconductors SMHon Hyperliquid 📈 chart | Equity | ▼ -0.4% hist -0.72–+1.82% · other way +2.88% (n=12) |
Probable recommendation
Historical precedent — what analogous events actually did
Across 39 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 |
|---|---|---|---|---|---|---|
| SOL SOL | SHORT | -13.1% · 5d -10.6% | 100% | 6 | 0.59 | ✓ matches cascade |
| AVGO AVGO | LONG | +4.6% · 5d -0.4% ↺ fades | 71% | 24 | 0.40 | ⚠ differs |
| ETH ETH | SHORT | -7.1% · 5d -5.2% | 70% | 10 | 0.31 | ✓ matches cascade |
| COIN COIN | LONG | +4.5% · 5d +8.1% | 67% | 6 | 0.27 | ⚠ differs |
| JPM JPM | SHORT | -0.9% · 5d -1.5% | 64% | 38 | 0.24 | ✓ matches cascade |
| SMH SMH | LONG | +1.8% · 5d -0.2% ↺ fades | 63% | 35 | 0.22 | ⚠ differs |
| XLF XLF | SHORT | -1.2% · 5d -1.3% | 61% | 35 | 0.20 | ✓ matches cascade |
| MSTR MSTR | SHORT | -3.1% · 5d -3.1% | 62% | 35 | 0.17 | ✓ matches cascade |
| High-yield credit HYG | SHORT | -0.4% · 5d -0.3% | 60% | 31 | 0.17 | ✓ matches cascade |
| Volatility VIX | SHORT | -0.8% · 5d +4.6% ↺ fades | 56% | 36 | 0.12 | ⚠ differs |
| Gold XAU | LONG | +1.0% · 5d +0.0% | 56% | 35 | 0.12 | · |
| Bitcoin BTC | LONG | +0.5% · 5d -3.1% ↺ fades | 56% | 13 | 0.10 | ⚠ differs |
| NDX NDX | LONG | +0.0% · 5d -1.1% ↺ fades | 55% | 37 | 0.08 | ⚠ differs |
| TSM TSM | LONG | +0.2% · 5d -1.4% ↺ fades | 55% | 35 | 0.08 | ⚠ differs |