What if a Middle East war forces a multitrillion-dollar US war budget?
A multitrillion war supplemental fuses two shocks: emergency Treasury supply (real yields up) and a Gulf oil-supply premium (Brent leads WTI higher), with equities selling on the vol spike. Rhymes with the 1990-91 Gulf War oil/yield combo and the 2022 Ukraine-invasion energy-and-rates shock. The transmission is the Strait of Hormuz for oil and dealer absorption for yields; the forward twist is that US shale and SPR capacity cap the oil upside more than in 1990, so the durable damage is likely more in rates/term-premium than in a sustained crude spike.
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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 0–6 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. A widening Middle East war forces a genuinely multitrillion-dollar US supplemental, triggering emergency Treasury issuance and a sharp yield spike. The trigger decomposes into signed root‑shocks — Geopolitical risk ▲ · Oil supply risk ▲ · Real yields ▲ — which propagate through our causal graph to the markets below.