What if the US peacetime deficit tops 9% of GDP?
A peacetime deficit above 9% (recession plus tax cuts) is a bear-steepener with a fiscal-premium twist: long yields rise on supply even as growth weakens, gold and BTC bid on dollar-debasement fears while rate-sensitive tech de-rates. Rhymes with 2020's COVID deficit blowout, though that came with QE that suppressed yields — the difference now is term premium having to clear the supply. The forward angle: a deficit this wide without offsetting QE is the genuinely new setup, so the long-end and dollar downside skews larger than the 2020 template.
Every number ships with its receipt — the odds, the range, the precedents, and a public grade at Reality Check. The statistical machinery that produces it is proprietary.
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 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. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. A recession-plus-tax-cut combination pushes the US deficit past 9% of GDP in peacetime. The trigger decomposes into signed root‑shocks — Dollar/reserve confidence ▼ · Real yields ▲ · Recession signal ▲ — which propagate through our causal graph to the markets below.