What if the Fed surprises markets with a rate hike?
Hawkish surprise: an unexpected 25bp hike after markets priced cuts backs up front-end and real yields (~6bp on 2y) and sells rate-sensitive growth (Nasdaq, crypto). The rhyme is the surprise-tightening reactions of 2022-23 and BOJ's Mar-2024 exit shock — front end jumped and duration/tech sold. Transmission: higher US real rates bid the dollar and pressure EM and gold; forward angle — the surprise is the whole trade, so the move is a fast repricing that stabilizes once the new path is digested; the cleanest expression is short front-end / short high-beta into the print.
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 0–6 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. The Fed delivers a surprise 25bps hike after markets had priced cuts. The trigger decomposes into signed root‑shocks — Fed policy path ▲ — 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 | MicroStrategy MSTRon Hyperliquid 📈 chart | Equity | ▼ -2.1% hist -5.9–+0.63% · other way +1.97% (n=12) |
| 2 | Solana SOLon Hyperliquid 📈 chart | Crypto | ▼ -1.4% hist -14.94–+2.54% · other way +18.48% (n=7) |
| 3 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▼ -1.3% hist -1.02–-0.29% · other way -0.49% (n=12) |
| 4 | Bitcoin BTCon Hyperliquid 📈 chart | Crypto | ▼ -1.1% hist -13.07–+2.05% · other way -7.22% (n=12) |
| 5 | Tech sector XLK 📈 chart | Equity | ▼ -1.1% hist -0.84–-0.18% · other way -0.09% (n=12) |
| 6 | Ether ETHon Hyperliquid 📈 chart | Crypto | ▼ -1.0% hist -9.15–+2.3% · other way -2.14% (n=10) |
| 7 | Hyperliquid (HYPE) HYPEon Hyperliquid | Crypto | ▼ -0.9% model prior · unmeasured |
| 8 | Gold XAUon Hyperliquid 📈 chart | Commodity | ▼ -0.7% hist -0.52–+0.22% · other way -0.08% (n=12) |
| 9 | Volatility (VIX) VIXon Hyperliquid 📈 chart | Vol | ▲ +0.7% hist -0.15–+0.53% · other way +9.57% (n=12) |
| 10 | S&P 500 SPXon Hyperliquid 📈 chart | Index | ▼ -0.6% hist -0.38–+0.06% · other way +1.89% (n=12) |
| 11 | US dollar (DXY) DXYon Hyperliquid 📈 chart | FX | ▲ +0.6% hist +0.04–+0.72% · other way -0.18% (n=12) |
| 12 | Coinbase COINon Hyperliquid 📈 chart | Equity | ▼ -0.7% hist -3.47–+1.09% · other way -3.68% (n=4) |
| 13 | 2y Treasury yield DGS2 | Rate | ▲ +6bp model prior · unmeasured |
| 14 | 30y Treasury yield DGS30 📈 chart | Rate | ▲ +6bp hist -0.88–+10.67% · other way -0.2% (n=12) |
Probable recommendation
Why we may diverge from history
Trust the cascade short on MU/ASML: +6-12% history is swamped by the 2025 Grasberg copper-squeeze and AI-capex windows, not a rate channel — a surprise hike compresses these multiples, history is off-channel.
Historical precedent — what analogous events actually did
Across 39 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 |
|---|---|---|---|---|---|---|
| ARM ARM | SHORT | -8.1% · 5d -9.3% | 100% | 4 | 0.58 | ✓ matches cascade |
| Bitcoin BTC | SHORT | -10.6% · 5d -6.5% | 71% | 24 | 0.36 | ✓ matches cascade |
| CNY CNY | SHORT | -0.4% · 5d -0.2% | 69% | 32 | 0.36 | ✓ matches cascade |
| SOL SOL | SHORT | -12.2% · 5d -9.5% | 70% | 20 | 0.33 | ✓ matches cascade |
| XLK XLK | SHORT | -0.3% · 5d -1.0% | 72% | 32 | 0.30 | ✓ matches cascade |
| MSTR MSTR | SHORT | -4.4% · 5d -3.3% | 69% | 32 | 0.29 | ✓ matches cascade |
| SMH SMH | SHORT | -1.2% · 5d -1.2% | 66% | 32 | 0.28 | ✓ matches cascade |
| MRVL MRVL | SHORT | -4.9% · 5d -3.5% | 66% | 32 | 0.25 | ✓ matches cascade |
| NVDA NVDA | SHORT | -4.0% · 5d -5.0% | 66% | 32 | 0.23 | ✓ matches cascade |
| ETH ETH | SHORT | -7.8% · 5d -4.9% | 64% | 22 | 0.22 | ✓ matches cascade |
| QCOM QCOM | SHORT | -0.6% · 5d -3.0% | 65% | 34 | 0.21 | ✓ matches cascade |
| High-yield credit HYG | SHORT | -0.3% · 5d +0.0% ↺ fades | 65% | 31 | 0.20 | ✓ matches cascade |
| KRW KRW | SHORT | -0.1% · 5d +0.3% ↺ fades | 59% | 32 | 0.17 | ✓ matches cascade |
| SPX SPX | LONG | +0.3% · 5d -0.3% ↺ fades | 59% | 39 | 0.16 | ⚠ differs |
Why this probability
Surprise hike after cuts priced is rare; Fed telegraphs; needs inflation re-acceleration shock. A base‑rate‑anchored prior, continuously scored against what actually happens — not a forecast.