What if sustained retail outflows from US high-yield funds distort spreads broadly?
Sustained retail outflows from US HY mutual funds and ETFs force managers to sell their most liquid holdings first, distorting relative value and widening spreads broadly.
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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 6–18 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. Sustained retail outflows from US HY mutual funds and ETFs force managers to sell their most liquid holdings first, distorting relative value and widening spreads broadly. The trigger decomposes into signed root‑shocks — Credit spreads ▲ · Recession signal ▲ · Risk appetite ▼ · Risk-parity deleveraging ▲ — which propagate through our causal graph to the markets below.