What if a euro-area sovereign-debt blowout sparked contagion?
A euro-area spread blowout (OAT/BTP) or large EM default sparks contagion via the vol channel: VIX spikes, risk-parity deleveraging mechanically sells equities and crypto, and HY/financials lead lower. Rhymes with the 2011-12 euro sovereign crisis (pre-'whatever it takes') and the 2018 BTP spread shock. Forward angle: France is now the fragile core — an OAT-Bund blowout with no easy political fix is the live risk, and the ECB's TPI backstop is untested at scale, so the first leg can overshoot before any 'whatever it takes' floor appears.
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 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. 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 euro-area spread blowout (Italy/France) or large EM default sparks contagion. The trigger decomposes into signed root‑shocks — Credit spreads ▲ · Geopolitical risk ▲ · 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 | Volatility (VIX) VIXon Hyperliquid 📈 chart | Vol | ▲ +4.4% hist -0.73–+7.94% · other way -0.64% (n=12) |
| 2 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▼ -1.9% hist -1.51–-0.51% · other way +0.12% (n=12) |
| 3 | MicroStrategy MSTRon Hyperliquid 📈 chart | Equity | ▼ -1.5% hist -1.21–+0.03% · other way +26.17% (n=12) |
| 4 | Tech sector XLK 📈 chart | Equity | ▼ -1.4% hist -0.99–+0.12% · other way +0.15% (n=12) |
| 5 | S&P 500 SPXon Hyperliquid 📈 chart | Index | ▼ -1.2% hist -1.35–-0.15% · other way -0.25% (n=12) |
| 6 | High-yield credit HYG 📈 chart | Rate | ▼ -1.1% hist -1.19–-0.1% · other way -0.18% (n=12) |
| 7 | Solana SOLon Hyperliquid 📈 chart | Crypto | ▼ -1.1% hist -2.79–+0.92% · other way -3.1% (n=11) |
| 8 | Hyperliquid (HYPE) HYPEon Hyperliquid | Crypto | ▼ -0.9% model prior · unmeasured |
| 9 | Bitcoin BTCon Hyperliquid 📈 chart | Crypto | ▼ -0.8% hist -7.33–+2.79% · other way +6.5% (n=11) |
| 10 | Semiconductors SMHon Hyperliquid 📈 chart | Equity | ▼ -0.9% hist -0.79–+1.39% · other way +2.96% (n=12) |
| 11 | Ether ETHon Hyperliquid 📈 chart | Crypto | ▼ -0.8% hist -10.71–+5.26% · other way +6.3% (n=11) |
| 12 | Financials XLF 📈 chart | Equity | ▼ -0.7% hist -0.98–+0.02% · other way +0.04% (n=12) |
| 13 | JPMorgan JPM 📈 chart | Equity | ▼ -0.6% hist -0.73–-0.02% · other way +1.96% (n=12) |
| 14 | Nvidia NVDAon Hyperliquid 📈 chart | Equity | ▼ -0.7% hist -1.24–+1.48% · other way +4.16% (n=12) |
Probable recommendation
Why we may diverge from history
Trust the cascade short on MSTR/COIN: the +19%/+9% history is pure regime contamination — every analogue window sits in 2023-25 when BTC's structural bull lifted the proxies, not a sovereign-debt risk-off path.
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 |
|---|---|---|---|---|---|---|
| COIN COIN | LONG | +15.3% · 5d +8.8% | 88% | 8 | 0.64 | ⚠ differs |
| High-yield credit HYG | SHORT | -0.7% · 5d -0.2% | 70% | 30 | 0.33 | ✓ matches cascade |
| ETH ETH | SHORT | -10.2% · 5d -7.3% | 73% | 11 | 0.32 | ✓ matches cascade |
| AVGO AVGO | LONG | +4.1% · 5d -0.5% ↺ fades | 67% | 24 | 0.32 | ⚠ differs |
| Bitcoin BTC | SHORT | -6.6% · 5d -3.5% | 67% | 15 | 0.29 | ✓ matches cascade |
| SMH SMH | LONG | +1.6% · 5d -1.0% ↺ fades | 64% | 33 | 0.22 | ⚠ differs |
| RTX RTX | SHORT | -2.3% · 5d -1.8% | 62% | 40 | 0.22 | ⚠ differs |
| AMD AMD | SHORT | -0.1% · 5d -1.1% | 60% | 40 | 0.16 | ✓ matches cascade |
| Volatility VIX | LONG | +5.3% · 5d +4.9% | 58% | 36 | 0.15 | ✓ matches cascade |
| Gold XAU | LONG | +0.7% · 5d +0.1% | 58% | 33 | 0.14 | ✓ matches cascade |
| XLF XLF | SHORT | -0.6% · 5d -1.0% | 58% | 33 | 0.13 | ✓ matches cascade |
| JPM JPM | SHORT | -0.4% · 5d -1.4% | 57% | 40 | 0.13 | ✓ matches cascade |
| ASML ASML | SHORT | -1.9% · 5d -3.0% | 56% | 34 | 0.09 | ✓ matches cascade |
| 10y yield DGS10 | SHORT | -13bp · 5d -4bp | 55% | 40 | 0.09 | · |
Why this probability
France/Italy spread risk live; full contagion crisis still a tail over three years. A base‑rate‑anchored prior, continuously scored against what actually happens — not a forecast.