What if quantitative tightening drains reserves too low and forces the Fed to reverse course?
Quantitative tightening drains reserves below the ample threshold, spiking funding rates and forcing the Fed to halt QT and resume reserve-management purchases.
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 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. 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 mixed shock. Quantitative tightening drains reserves below the ample threshold, spiking funding rates and forcing the Fed to halt QT and resume reserve-management purchases. The trigger decomposes into signed root‑shocks — Fed policy path ▼ · Financial conditions ▲ · Real yields ▼ — 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 | Tech sector XLK 📈 chart | Equity | ▲ +0.7% hist -0.06–+1.03% · other way -0.2% (n=11) |
| 2 | Gold XAUon Hyperliquid 📈 chart | Commodity | ▲ +0.6% hist +0.17–+0.45% · other way +1.31% (n=11) |
| 3 | 30y Treasury yield DGS30 📈 chart | Rate | ▼ -5bp hist -16.2–+2.38% · other way +21.9% (n=12) |
| 4 | 10y Treasury yield DGS10 📈 chart | Rate | ▼ -5bp hist -17.79–+4.55% · other way +20.6% (n=12) |
| 5 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▲ +0.5% hist -0.25–+0.47% · other way -0.69% (n=11) |
| 6 | Arm ARMon Hyperliquid 📈 chart | Equity | ▲ +0.3% model prior · unmeasured |
| 7 | Homebuilders XHB 📈 chart | Equity | ▲ +0.3% hist -1.25–+0.31% · other way -2.17% (n=11) |
| 8 | Robinhood HOODon Hyperliquid 📈 chart | Equity | ▲ +0.2% hist -19.62–+7.9% · other way +10.55% (n=10) |
| 9 | US dollar (DXY) DXYon Hyperliquid 📈 chart | FX | ▼ -0.2% hist -0.31–+0.31% · other way +0.63% (n=12) |
| 10 | 2y Treasury yield DGS2 | Rate | ▼ -2bp model prior · unmeasured |
| 11 | USD/JPY USDJPYon Hyperliquid 📈 chart | FX | ▼ -0.2% hist -0.25–+0.17% · other way +0.78% (n=11) |
| 12 | EUR/USD EURUSDon Hyperliquid 📈 chart | FX | ▲ +0.2% hist -0.97–+0.59% · other way -0.67% (n=11) |
| 13 | Semiconductors SMHon Hyperliquid 📈 chart | Equity | ▲ +0.2% hist -0.59–+1.85% · other way +0.1% (n=11) |
| 14 | Hyperliquid (HYPE) HYPEon Hyperliquid | Crypto | ▲ +0.1% model prior · unmeasured |
Probable recommendation
Historical precedent — what analogous events actually did
Across 25 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 |
|---|---|---|---|---|---|---|
| HOOD HOOD | SHORT | -18.6% · 5d -7.4% | 100% | 4 | 0.83 | ⚠ differs |
| Bitcoin BTC | SHORT | -8.6% · 5d -1.6% | 83% | 6 | 0.54 | · |
| XHB XHB | SHORT | -1.1% · 5d +0.3% ↺ fades | 71% | 21 | 0.35 | ⚠ differs |
| High-yield credit HYG | SHORT | -0.7% · 5d -0.1% | 70% | 20 | 0.34 | · |
| 30y yield DGS30 | SHORT | -12bp · 5d -7bp | 64% | 25 | 0.26 | ✓ matches cascade |
| SMH SMH | LONG | +1.6% · 5d -1.0% ↺ fades | 59% | 22 | 0.15 | ✓ matches cascade |
| 10y yield DGS10 | SHORT | -14bp · 5d -8bp | 56% | 25 | 0.11 | ✓ matches cascade |
| XLK XLK | LONG | +0.6% · 5d -0.7% ↺ fades | 55% | 22 | 0.07 | ✓ matches cascade |
| NVDA NVDA | LONG | +3.2% · 5d -3.7% ↺ fades | 55% | 22 | 0.07 | ✓ matches cascade |
| EURUSD EURUSD | SHORT | -1.1% · 5d -0.3% | 52% | 21 | 0.05 | ⚠ differs |
| GBPUSD GBPUSD | SHORT | -0.2% · 5d -0.1% | 52% | 21 | 0.04 | ⚠ differs |
| Volatility VIX | LONG | +5.5% · 5d +3.1% | 52% | 23 | 0.04 | · |
| US dollar DXY | LONG | +0.5% · 5d +0.1% | 52% | 25 | 0.03 | ⚠ differs |
| Gold XAU | LONG | +0.1% · 5d +0.2% | 50% | 22 | 0.00 | ✓ matches cascade |