What if a gilt spike sets off a bigger UK pension LDI doom loop?
A gilt-yield spike forcing UK LDI funds to dump bonds for collateral is a self-feeding sovereign-bond doom loop — long-end gilts gap, sterling and risk wobble until the BoE backstops. This IS the September-2022 mini-budget LDI crisis, where 30y gilts moved ~120bp in days until the BoE's emergency bond-buying. Forward angle: pension buffers are larger post-2022, but the playbook (BoE intervention) is now priced — the tail is a backstop that arrives late or is constrained by inflation. Trade long gilts and GBP.
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 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. 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. A gilt-yield spike forces UK pension LDI funds into forced bond sales to meet derivative collateral calls, echoing 2022 but larger. The trigger decomposes into signed root‑shocks — Fed policy path ▲ · Financial conditions ▲ · 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 | MicroStrategy MSTRon Hyperliquid 📈 chart | Equity | ▼ -4.8% hist -5.36–-0.4% · other way +19.6% (n=12) |
| 2 | Solana SOLon Hyperliquid 📈 chart | Crypto | ▼ -4.3% hist -9.97–+3.68% · other way +6.12% (n=9) |
| 3 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▼ -3.0% hist -2.38–-0.91% · other way +1.5% (n=12) |
| 4 | Ether ETHon Hyperliquid 📈 chart | Crypto | ▼ -3.0% hist -4.83–+0.23% · other way +8.3% (n=9) |
| 5 | Hyperliquid (HYPE) HYPEon Hyperliquid | Crypto | ▼ -2.8% model prior · unmeasured |
| 6 | Bitcoin BTCon Hyperliquid 📈 chart | Crypto | ▼ -2.6% hist -8.42–+2.9% · other way +1.4% (n=9) |
| 7 | Tech sector XLK 📈 chart | Equity | ▼ -2.3% hist -1.54–-0.7% · other way +2.27% (n=12) |
| 8 | Volatility (VIX) VIXon Hyperliquid 📈 chart | Vol | ▲ +1.9% hist -1.11–+5.25% · other way -4.46% (n=12) |
| 9 | S&P 500 SPXon Hyperliquid 📈 chart | Index | ▼ -1.6% hist -1.83–-0.17% · other way +1.85% (n=12) |
| 10 | Coinbase COINon Hyperliquid 📈 chart | Equity | ▼ -1.7% hist -4.58–+6.33% · other way +15.92% (n=7) |
| 11 | Semiconductors SMHon Hyperliquid 📈 chart | Equity | ▼ -1.4% hist -1.11–+0.2% · other way +3.03% (n=12) |
| 12 | High-yield credit HYG 📈 chart | Rate | ▼ -1.4% hist -1.1–-0.23% · other way -0.26% (n=11) |
| 13 | Financials XLF 📈 chart | Equity | ▼ -1.1% hist -1.16–-0.14% · other way +0.48% (n=12) |
| 14 | Nvidia NVDAon Hyperliquid 📈 chart | Equity | ▼ -0.9% hist -1.3–+1.29% · other way +5.11% (n=12) |
Probable recommendation
Why we may diverge from history
Trust history on XAU: gold genuinely rallied in Lehman (+13%) and SVB (+10%) as an on-channel safe-haven in collateral runs — the cascade's short over-reaches against a clean LDI-relevant bid.
Historical precedent — what analogous events actually did
Across 31 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 |
|---|---|---|---|---|---|---|
| COIN COIN | LONG | +7.4% · 5d +7.7% | 86% | 7 | 0.49 | ⚠ differs |
| KRW KRW | SHORT | -1.7% · 5d +0.1% ↺ fades | 73% | 26 | 0.43 | ✓ matches cascade |
| MRVL MRVL | SHORT | -1.4% · 5d -3.6% | 74% | 27 | 0.41 | ✓ matches cascade |
| Bitcoin BTC | SHORT | -6.7% · 5d -4.7% | 70% | 10 | 0.32 | ✓ matches cascade |
| MSTR MSTR | SHORT | -2.9% · 5d -2.7% | 67% | 27 | 0.27 | ✓ matches cascade |
| High-yield credit HYG | SHORT | -0.4% · 5d +0.1% ↺ fades | 67% | 24 | 0.27 | ✓ matches cascade |
| ETH ETH | SHORT | -2.4% · 5d -4.5% | 62% | 8 | 0.16 | ✓ matches cascade |
| AUD AUD | SHORT | -0.8% · 5d -0.1% | 58% | 26 | 0.15 | ✓ matches cascade |
| JPM JPM | SHORT | -0.1% · 5d -1.5% | 58% | 31 | 0.14 | ✓ matches cascade |
| GBPUSD GBPUSD | SHORT | -0.4% · 5d -0.1% | 58% | 26 | 0.14 | ✓ matches cascade |
| AMD AMD | SHORT | -1.2% · 5d -2.6% | 58% | 31 | 0.13 | ✓ matches cascade |
| TRY TRY | LONG | +0.5% · 5d +0.6% | 58% | 26 | 0.11 | ⚠ differs |
| USDJPY USDJPY | LONG | +0.5% · 5d -0.3% ↺ fades | 56% | 27 | 0.10 | ✓ matches cascade |
| Volatility VIX | LONG | +4.0% · 5d +3.0% | 55% | 29 | 0.09 | ✓ matches cascade |
Why this probability
Post-2022 LDI buffers rebuilt; gilt spike possible but 'larger than 2022' is demanding. A base‑rate‑anchored prior, continuously scored against what actually happens — not a forecast.