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.
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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. 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.