What if an unexpectedly strong shunto wage round forces the BoJ to accelerate rate hikes?
An unexpectedly strong shunto wage round entrenches inflation above target, forcing the BoJ to accelerate normalization beyond market pricing and triggering an abrupt JGB and yen repricing that hits bank books.
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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. An unexpectedly strong shunto wage round entrenches inflation above target, forcing the BoJ to accelerate normalization beyond market pricing and triggering an abrupt JGB and yen repricing that hits bank books. The trigger decomposes into signed root‑shocks — Inflation expectations ▲ · Inflation surprise ▲ · Real yields ▲ · Risk appetite ▼ — which propagate through our causal graph to the markets below.