What if replacing cheap maturing debt at higher rates erodes corporate margins broadly?
Even solvent issuers see earnings eroded as maturing low-coupon debt is replaced at higher rates, a slow-burn drag on corporate margins and equity the Fed's rate overlays capture.
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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. Even solvent issuers see earnings eroded as maturing low-coupon debt is replaced at higher rates, a slow-burn drag on corporate margins and equity the Fed's rate overlays capture. The trigger decomposes into signed root‑shocks — Credit spreads ▲ · Real yields ▲ · Recession signal ▲ · Risk appetite ▼ — which propagate through our causal graph to the markets below.