What if a sovereign wealth fund dumps US equities?
A sovereign wealth fund rotating out of US equities hits the long end and the dollar first: 30y/10y yields back up on fading reserve demand, gold and BTC bid as non-sovereign hedges while Nasdaq leads equities lower. Rhymes with the 2013 taper tantrum's reserve-flow dynamics and episodic foreign-selling scares. Forward angle: with US debt/GDP elevated and reserve diversification a live theme, a credible exit headline now moves term premium more than dip-buyers can offset.
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 large sovereign wealth fund rotates aggressively out of US equities. The trigger decomposes into signed root‑shocks — Risk appetite ▼ · Dollar/reserve confidence ▼ — 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 | Gold XAUon Hyperliquid 📈 chart | Commodity | ▲ +1.2% hist -0.16–+2.13% · other way +0.0% (n=12) |
| 2 | MicroStrategy MSTRon Hyperliquid 📈 chart | Equity | ▲ +1.0% hist -1.33–+1.16% · other way +22.61% (n=12) |
| 3 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▼ -0.8% hist -0.89–-0.08% · other way +0.24% (n=12) |
| 4 | S&P 500 SPXon Hyperliquid 📈 chart | Index | ▼ -0.6% hist -0.44–+0.52% · other way +0.9% (n=12) |
| 5 | US dollar (DXY) DXYon Hyperliquid 📈 chart | FX | ▼ -0.6% hist -0.38–-0.13% · other way +0.51% (n=12) |
| 6 | Bitcoin BTCon Hyperliquid 📈 chart | Crypto | ▲ +0.5% hist -1.83–+4.51% · other way +9.45% (n=12) |
| 7 | Volatility (VIX) VIXon Hyperliquid 📈 chart | Vol | ▲ +0.5% hist -6.39–+1.72% · other way -1.16% (n=12) |
| 8 | EUR/USD EURUSDon Hyperliquid 📈 chart | FX | ▲ +0.5% hist -0.15–+0.48% · other way -0.36% (n=12) |
| 9 | Tech sector XLK 📈 chart | Equity | ▼ -0.5% hist -0.38–+0.19% · other way +0.36% (n=12) |
| 10 | 30y Treasury yield DGS30 📈 chart | Rate | ▲ +4bp hist -2.91–+4.59% · other way +8.8% (n=12) |
| 11 | Coinbase COINon Hyperliquid 📈 chart | Equity | ▲ +0.4% hist -0.28–+0.96% · other way +21.75% (n=11) |
| 12 | USD/JPY USDJPYon Hyperliquid 📈 chart | FX | ▼ -0.4% hist -0.4–+0.53% · other way +0.77% (n=12) |
| 13 | GBP/USD GBPUSDon Hyperliquid 📈 chart | FX | ▲ +0.4% hist -0.04–+0.35% · other way -0.59% (n=12) |
| 14 | 10y Treasury yield DGS10 📈 chart | Rate | ▲ +4bp hist -5.69–+5.37% · other way +10.6% (n=12) |
Probable recommendation
Why we may diverge from history
Trust the cascade short on AVGO/MRVL: the +5-7% realized is the COVID/carry-unwind rebound regime; a sovereign fund dumping US equities is sustained mechanical supply, not a liquidity-rescue V the analogues captured.
Historical precedent — what analogous events actually did
Across 32 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 |
|---|---|---|---|---|---|---|
| SOL SOL | SHORT | -7.3% · 5d -3.6% | 100% | 5 | 0.51 | ✓ matches cascade |
| AVGO AVGO | LONG | +4.2% · 5d -1.2% ↺ fades | 74% | 22 | 0.41 | ⚠ differs |
| INR INR | SHORT | -0.7% · 5d +0.2% ↺ fades | 69% | 24 | 0.32 | ⚠ differs |
| Volatility VIX | SHORT | -5.7% · 5d +4.3% ↺ fades | 66% | 25 | 0.31 | ⚠ differs |
| AMD AMD | SHORT | -2.4% · 5d -1.7% | 66% | 28 | 0.26 | ✓ matches cascade |
| ETH ETH | SHORT | -5.7% · 5d -5.5% | 65% | 9 | 0.24 | ✓ matches cascade |
| AUD AUD | LONG | +0.7% · 5d +0.2% | 63% | 24 | 0.24 | ✓ matches cascade |
| Bitcoin BTC | LONG | +4.1% · 5d -1.4% ↺ fades | 62% | 16 | 0.21 | ✓ matches cascade |
| MU MU | SHORT | -4.1% · 5d -1.4% | 63% | 28 | 0.21 | ✓ matches cascade |
| NDX NDX | SHORT | -0.5% · 5d -0.9% | 63% | 28 | 0.20 | ✓ matches cascade |
| MRVL MRVL | LONG | +2.0% · 5d +1.1% | 63% | 24 | 0.20 | ⚠ differs |
| SPX SPX | LONG | +0.7% · 5d -1.1% ↺ fades | 60% | 30 | 0.19 | ⚠ differs |
| SMH SMH | LONG | +0.8% · 5d +0.3% | 63% | 24 | 0.18 | ⚠ differs |
| Gold XAU | LONG | +1.4% · 5d +0.2% | 59% | 24 | 0.15 | ✓ matches cascade |
Why this probability
Aggressive SWF exit from US equities is rare; reserve diversification gradual, not abrupt. A base‑rate‑anchored prior, continuously scored against what actually happens — not a forecast.