What if Hungary's spending splurge breaches EU deficit rules and sinks the forint?
A 6.2% deficit breach forces MNB to hold instead of cut: short HUF (the highest-carry CE3 funder) as the rate-cut path is repriced hawkish and the EDP premium widens. Direct analogue is Hungary 2022, when the forint hit ~430/EUR and MNB ran an 18% effective rate to defend it. Hungary funds itself in EU markets and trades on German demand; the live risk is that frozen EU funds compound the fiscal hole. AUD/EM-FX cascade lines are peripheral — this is a forint carry-unwind story.
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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-off shock. New government's spending pushes 2026 deficit to 6.2%, breaching the EDP path; forint slides, forcing MNB to abandon rate cuts. The trigger decomposes into signed root‑shocks — FX carry appetite ▼ · Credit spreads ▲ · Fed policy path ▲ — which propagate through our causal graph to the markets below.