What if Italy fiscal-populism relapse reopens the BTP-Bund spread?
A populist Italian budget that breaches EU rules reopens the BTP-Bund spread and revives doom-loop fears; European credit spreads widen and risk appetite softens on periphery-redenomination tail risk.
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-off shock. A populist Italian budget that breaches EU rules reopens the BTP-Bund spread and revives doom-loop fears; European credit spreads widen and risk appetite softens on periphery-redenomination tail risk. The trigger decomposes into signed root‑shocks — Credit spreads ▲ · Yield-curve slope ▲ · Dollar/reserve confidence ▲ · Risk appetite ▼ — which propagate through our causal graph to the markets below.