What if foreign money flees India's bond index?
A reversal of JPMorgan-index G-sec inflows spikes Indian yields and reopens the fiscal-deficit debate: short Indian duration and rate-sensitive equities as foreign bond money exits. Rhymes with the 2013 taper tantrum, when foreign debt outflows spiked G-sec yields and pressured the rupee simultaneously. Transmission: passive index flows are price-insensitive on the way out, amplifying the move. Forward: index inclusion is new (2024), so this is the first real test of how fast benchmark-driven money flees Indian bonds under stress.
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. A surprise reversal of JPMorgan-index foreign inflows spikes Indian G-sec yields and rattles the fiscal-deficit narrative. The trigger decomposes into signed root‑shocks — Financial conditions ▲ · Real yields ▲ · Risk appetite ▼ — which propagate through our causal graph to the markets below.