What if Japan's wage talks deliver a 7% inflation breakout?
A 7% Shunto print entrenches Japanese inflation and forces faster BOJ normalization than priced: the read is higher global real yields and a selloff in long-duration tech as 2y/10y/30y back up. The provided US-CPI/Jackson-Hole 2022 analogues capture the mechanism — a hawkish repricing crushed Nasdaq via the discount rate. Transmission: a normalizing BOJ pulls Japanese capital home, lifting global yields at the margin. Forward: this is the first wage-driven (not import-driven) Japanese inflation in a generation, so it is stickier and harder to fade.
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 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. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. Shunto wage talks deliver 7% raises, entrenching above-target inflation and forcing faster BOJ normalization than markets price. The trigger decomposes into signed root‑shocks — FX carry appetite ▼ · Fed policy path ▲ · Inflation surprise ▲ — which propagate through our causal graph to the markets below.