What if the T+1 and T+2 mismatch sparks a wave of FX settlement fails?
T+1 equities settling against T+2 FX leaves foreign holders scrambling for same-day dollars, a funding mismatch that bids the dollar and pressures gold/BTC as reserve hedges sell. This is a known post-May-2024 T+1 friction (FX funding gaps for European/Asian holders of US equities), so far managed via pre-funding rather than a crisis. The labeled stance is RISK-ON but the mechanism is a dollar-funding squeeze — the move is a transient DXY bid and FX-fail noise, not a durable trend; fade it.
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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 (electric blue) over time vs the market's (Polymarket, amber), 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. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-on shock. Compressed T+1 equity settlement collides with T+2 FX, leaving foreign investors short dollars and triggering a wave of cross-border fails. The trigger decomposes into signed root‑shocks — Dollar/reserve confidence ▲ · Financial conditions ▲ — which propagate through our causal graph to the markets below.