What if Offshore dollar-funding squeeze hits EM swap lines and basis?
A scramble for dollar funding blows out cross-currency basis swaps for EM borrowers, raising hedging costs and forcing reserve managers to backstop local banks' dollar needs.
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 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. 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 scramble for dollar funding blows out cross-currency basis swaps for EM borrowers, raising hedging costs and forcing reserve managers to backstop local banks' dollar needs. The trigger decomposes into signed root‑shocks — US dollar (DXY) ▲ · EM currencies ▼ · Credit spreads ▲ · 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 | ▼ -1.8% hist -4.43–+0.57% · other way +27.47% (n=12) |
| 2 | Solana SOLon Hyperliquid 📈 chart | Crypto | ▼ -1.3% hist -11.46–+1.45% · other way -1.04% (n=11) |
| 3 | Turkish lira TRY 📈 chart | FX | ▼ -1.0% hist -0.71–+-0.0% · other way -0.6% (n=12) |
| 4 | Bitcoin BTCon Hyperliquid 📈 chart | Crypto | ▼ -1.0% hist -3.37–+0.92% · other way +6.05% (n=11) |
| 5 | Ether ETHon Hyperliquid 📈 chart | Crypto | ▼ -1.0% hist -7.25–+2.06% · other way +4.87% (n=11) |
| 6 | Hyperliquid (HYPE) HYPEon Hyperliquid | Crypto | ▼ -0.9% model prior · unmeasured |
| 7 | Indian rupee INR 📈 chart | FX | ▼ -0.9% hist -0.78–-0.19% · other way -0.34% (n=12) |
| 8 | High-yield credit HYG 📈 chart | Rate | ▼ -0.8% hist -0.82–-0.09% · other way -0.28% (n=12) |
| 9 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▼ -0.8% hist -1.01–-0.05% · other way +0.06% (n=12) |
| 10 | Volatility (VIX) VIXon Hyperliquid 📈 chart | Vol | ▲ +0.8% hist -1.55–+4.12% · other way -0.58% (n=12) |
| 11 | Coinbase COINon Hyperliquid 📈 chart | Equity | ▼ -0.6% hist -2.98–+1.16% · other way +21.75% (n=11) |
| 12 | S&P 500 SPXon Hyperliquid 📈 chart | Index | ▼ -0.6% hist -0.25–-0.06% · other way +0.04% (n=12) |
| 13 | Financials XLF 📈 chart | Equity | ▼ -0.5% hist -0.3–-0.17% · other way +0.01% (n=12) |
| 14 | Tech sector XLK 📈 chart | Equity | ▼ -0.5% hist -0.47–+0.11% · other way +0.09% (n=12) |
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 |
|---|---|---|---|---|---|---|
| SOL SOL | SHORT | -9.1% · 5d -9.4% | 81% | 18 | 0.39 | ✓ matches cascade |
| KRW KRW | SHORT | -1.6% · 5d -0.1% | 66% | 34 | 0.31 | ✓ matches cascade |
| High-yield credit HYG | SHORT | -0.4% · 5d -0.0% | 69% | 33 | 0.30 | ✓ matches cascade |
| SPX SPX | LONG | +0.1% · 5d -0.1% ↺ fades | 66% | 40 | 0.30 | ⚠ differs |
| MSTR MSTR | SHORT | -3.2% · 5d -3.4% | 64% | 35 | 0.23 | ✓ matches cascade |
| ETH ETH | SHORT | -6.2% · 5d -6.1% | 67% | 18 | 0.22 | ✓ matches cascade |
| Gold XAU | LONG | +0.7% · 5d +0.3% | 62% | 35 | 0.21 | · |
| SMH SMH | LONG | +1.4% · 5d -0.7% ↺ fades | 62% | 35 | 0.20 | ⚠ differs |
| AVGO AVGO | LONG | +2.4% · 5d -0.5% ↺ fades | 59% | 27 | 0.16 | ⚠ differs |
| AMD AMD | SHORT | -0.0% · 5d -1.7% | 59% | 39 | 0.13 | ✓ matches cascade |
| MU MU | SHORT | -0.2% · 5d -3.9% | 57% | 38 | 0.13 | ✓ matches cascade |
| USDJPY USDJPY | LONG | +0.3% · 5d -0.1% ↺ fades | 56% | 35 | 0.12 | ✓ matches cascade |
| Bitcoin BTC | SHORT | -2.7% · 5d -2.6% | 57% | 19 | 0.10 | ✓ matches cascade |
| XLF XLF | LONG | +0.0% · 5d -1.1% ↺ fades | 55% | 35 | 0.08 | ⚠ differs |