What if Risk-parity unwind on inflation shock: stocks and bonds fall together?
A renewed inflation scare flips the stock-bond correlation positive, forcing risk-parity and 60/40 deleveraging that amplifies a simultaneous selloff.
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 risk-off shock. A renewed inflation scare flips the stock-bond correlation positive, forcing risk-parity and 60/40 deleveraging that amplifies a simultaneous selloff. The trigger decomposes into signed root‑shocks — Volatility (VIX) ▲ · Inflation surprise ▲ · Real yields ▲ · Risk appetite ▼ · Risk-parity deleveraging ▲ — 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 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▼ -1.4% hist -1.21–+0.03% · other way -0.56% (n=12) |
| 2 | Tech sector XLK 📈 chart | Equity | ▼ -1.1% hist -1.12–+-0.0% · other way -0.47% (n=12) |
| 3 | MicroStrategy MSTRon Hyperliquid 📈 chart | Equity | ▼ -1.1% hist -2.3–+0.4% · other way +31.9% (n=12) |
| 4 | Solana SOLon Hyperliquid 📈 chart | Crypto | ▼ -0.8% hist -3.59–+1.89% · other way -0.48% (n=12) |
| 5 | Volatility (VIX) VIXon Hyperliquid 📈 chart | Vol | ▲ +0.8% hist -8.81–+4.19% · other way -1.26% (n=12) |
| 6 | Hyperliquid (HYPE) HYPEon Hyperliquid | Crypto | ▼ -0.7% model prior · unmeasured |
| 7 | 30y Treasury yield DGS30 📈 chart | Rate | ▲ +6bp hist +0.48–+7.34% · other way +5.4% (n=12) |
| 8 | S&P 500 SPXon Hyperliquid 📈 chart | Index | ▼ -0.6% hist -1.61–+0.34% · other way +1.48% (n=12) |
| 9 | Ether ETHon Hyperliquid 📈 chart | Crypto | ▼ -0.6% hist -4.57–+2.67% · other way +4.46% (n=12) |
| 10 | Bitcoin BTCon Hyperliquid 📈 chart | Crypto | ▼ -0.6% hist -2.24–+2.46% · other way +7.54% (n=12) |
| 11 | 10y Treasury yield DGS10 📈 chart | Rate | ▲ +6bp hist +1.82–+3.7% · other way +6.3% (n=12) |
| 12 | Gold XAUon Hyperliquid 📈 chart | Commodity | ▼ -0.5% hist -0.86–+0.72% · other way +0.47% (n=12) |
| 13 | Semiconductors SMHon Hyperliquid 📈 chart | Equity | ▼ -0.5% hist -0.77–+0.62% · other way +1.1% (n=12) |
| 14 | Arm ARMon Hyperliquid 📈 chart | Equity | ▼ -0.3% hist -8.02–+4.38% · other way +0.73% (n=11) |
Probable recommendation
Historical precedent — what analogous events actually did
Across 21 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 |
|---|---|---|---|---|---|---|
| XHB XHB | SHORT | -2.3% · 5d -2.4% | 83% | 17 | 0.53 | ✓ matches cascade |
| ARM ARM | SHORT | -7.9% · 5d -0.7% | 100% | 2 | 0.52 | ✓ matches cascade |
| AVGO AVGO | LONG | +4.7% · 5d -1.3% ↺ fades | 68% | 15 | 0.32 | ⚠ differs |
| COIN COIN | LONG | +11.9% · 5d +4.7% | 67% | 6 | 0.29 | ⚠ differs |
| Volatility VIX | SHORT | -8.8% · 5d +12.2% ↺ fades | 63% | 17 | 0.24 | ⚠ differs |
| QCOM QCOM | SHORT | -2.9% · 5d -1.2% | 69% | 17 | 0.24 | ✓ matches cascade |
| ASML ASML | LONG | +0.2% · 5d -0.2% ↺ fades | 66% | 17 | 0.21 | ⚠ differs |
| SOL SOL | SHORT | -3.1% · 5d -6.4% | 67% | 6 | 0.20 | ✓ matches cascade |
| ETH ETH | SHORT | -4.3% · 5d -5.1% | 62% | 10 | 0.18 | ✓ matches cascade |
| Bitcoin BTC | LONG | +3.0% · 5d -4.3% ↺ fades | 60% | 12 | 0.17 | ⚠ differs |
| 30y yield DGS30 | LONG | +4bp · 5d +6bp | 58% | 21 | 0.16 | ✓ matches cascade |
| MRVL MRVL | LONG | +2.1% · 5d +1.0% | 60% | 17 | 0.16 | ⚠ differs |
| TSM TSM | SHORT | -1.9% · 5d -0.8% | 60% | 17 | 0.14 | ✓ matches cascade |
| MSTR MSTR | SHORT | -1.6% · 5d -2.7% | 60% | 17 | 0.13 | ✓ matches cascade |