What if OAT-Bund spread blows past 100bp on French political deadlock?
A hung French parliament blocks any credible deficit fix, pushing the 10y OAT-Bund spread above 100bp as investors re-price French sovereign risk toward the periphery.
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The butterfly cascade
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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. A hung French parliament blocks any credible deficit fix, pushing the 10y OAT-Bund spread above 100bp as investors re-price French sovereign risk toward the periphery. The trigger decomposes into signed root‑shocks — Credit spreads ▲ · Yield-curve slope ▲ · Financial conditions ▲ · Risk appetite ▼ — which propagate through our causal graph to the markets below.