What if the JGB term premium blows out as Japan's debt sustainability comes into doubt?
Doubts over Japan's debt sustainability at ~250% of GDP plus fading BoJ buying lift the JGB term premium sharply, raising government interest costs and inflicting large valuation losses on the banks and insurers that hold the bulk of JGBs.
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 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. 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. Doubts over Japan's debt sustainability at ~250% of GDP plus fading BoJ buying lift the JGB term premium sharply, raising government interest costs and inflicting large valuation losses on the banks and insurers that hold the bulk of JGBs. The trigger decomposes into signed root‑shocks — Credit spreads ▲ · Dollar/reserve confidence ▼ · Real yields ▲ · 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 | Tech sector XLK 📈 chart | Equity | ▼ -1.3% hist -0.93–-0.22% · other way +0.09% (n=12) |
| 2 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▼ -1.3% hist -1.25–-0.24% · other way +0.06% (n=12) |
| 3 | 30y Treasury yield DGS30 📈 chart | Rate | ▲ +11bp hist -4.03–+8.19% · other way +8.8% (n=12) |
| 4 | 10y Treasury yield DGS10 📈 chart | Rate | ▲ +10bp hist -5.61–+9.71% · other way +9.1% (n=12) |
| 5 | S&P 500 SPXon Hyperliquid 📈 chart | Index | ▼ -0.8% hist -0.35–-0.2% · other way +0.04% (n=12) |
| 6 | Gold XAUon Hyperliquid 📈 chart | Commodity | ▲ +0.6% hist -0.06–+1.0% · other way +0.37% (n=12) |
| 7 | Semiconductors SMHon Hyperliquid 📈 chart | Equity | ▼ -0.6% hist -0.69–+1.15% · other way +2.75% (n=12) |
| 8 | Volatility (VIX) VIXon Hyperliquid 📈 chart | Vol | ▲ +0.6% hist -2.0–+4.71% · other way -0.58% (n=12) |
| 9 | US dollar (DXY) DXYon Hyperliquid 📈 chart | FX | ▼ -0.6% hist -0.47–+0.11% · other way +0.89% (n=12) |
| 10 | High-yield credit HYG 📈 chart | Rate | ▼ -0.6% hist -0.84–-0.01% · other way -0.28% (n=12) |
| 11 | EUR/USD EURUSDon Hyperliquid 📈 chart | FX | ▲ +0.5% hist -0.62–+0.7% · other way -0.88% (n=12) |
| 12 | Financials XLF 📈 chart | Equity | ▼ -0.4% hist -0.42–-0.06% · other way +0.01% (n=12) |
| 13 | Arm ARMon Hyperliquid 📈 chart | Equity | ▼ -0.4% hist -3.84–+2.32% · other way +4.01% (n=10) |
| 14 | Hyperliquid (HYPE) HYPEon Hyperliquid | Crypto | ▼ -0.4% model prior · unmeasured |
Probable recommendation
Historical precedent — what analogous events actually did
Across 40 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 |
|---|---|---|---|---|---|---|
| KRW KRW | SHORT | -1.7% · 5d -0.0% | 71% | 32 | 0.40 | ⚠ differs |
| SOL SOL | SHORT | -8.6% · 5d -10.2% | 79% | 16 | 0.36 | ✓ matches cascade |
| High-yield credit HYG | SHORT | -0.5% · 5d -0.1% | 69% | 31 | 0.33 | ✓ matches cascade |
| SPX SPX | LONG | +0.0% · 5d +-0.0% ↺ fades | 66% | 39 | 0.29 | ⚠ differs |
| XHB XHB | SHORT | -1.1% · 5d -0.1% | 67% | 32 | 0.29 | ✓ matches cascade |
| Gold XAU | LONG | +0.7% · 5d +0.4% | 60% | 33 | 0.19 | ✓ matches cascade |
| SMH SMH | LONG | +1.3% · 5d -0.8% ↺ fades | 60% | 33 | 0.18 | ⚠ differs |
| MSTR MSTR | SHORT | -2.0% · 5d -3.0% | 60% | 33 | 0.17 | ⚠ differs |
| AMD AMD | SHORT | -0.2% · 5d -1.9% | 59% | 37 | 0.14 | ✓ matches cascade |
| 30y yield DGS30 | SHORT | -8bp · 5d -4bp | 57% | 38 | 0.13 | ⚠ differs |
| JPM JPM | SHORT | -0.2% · 5d -1.6% | 57% | 37 | 0.13 | ✓ matches cascade |
| ASML ASML | SHORT | -2.1% · 5d -3.3% | 58% | 33 | 0.13 | ✓ matches cascade |
| USDJPY USDJPY | LONG | +0.4% · 5d -0.1% ↺ fades | 57% | 33 | 0.12 | ⚠ differs |
| AVGO AVGO | LONG | +2.3% · 5d -0.5% ↺ fades | 57% | 25 | 0.12 | ⚠ differs |