What if Repo-spike to equity selloff: funding stress forces de-risking?
A spike in repo and funding rates forces leveraged players to raise cash by selling equities, transmitting plumbing stress to risk assets. The tightening lifts volatility and depresses risk appetite.
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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 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 spike in repo and funding rates forces leveraged players to raise cash by selling equities, transmitting plumbing stress to risk assets. The tightening lifts volatility and depresses risk appetite. The trigger decomposes into signed root‑shocks — Volatility (VIX) ▲ · Financial conditions ▲ · Risk appetite ▼ · Risk-parity deleveraging ▲ — which propagate through our causal graph to the markets below.