What if the yen carry trade collapses and triggers a global risk-asset selloff?
A surprise BoJ hike plus Fed easing collapses the yen carry trade, snapping USD/JPY sharply stronger and forcing a global risk-asset deleveraging like the August-2024 unwind.
how we built this number — every step
The class rate is measured from our dated, sourced event library (decade-normalized Poisson — the full table is public at base_rates.json). The variant’s share within its class is the analyst’s editorial call, published so you can audit it. A wider range means thinner precedent. Full recipe: methodology · scored at Reality Check.
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 (gold) over time vs the crowd's (Polymarket, blue), 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. The gold path is an illustrative reconstruction anchored to today's estimate — real dated events, not a live re-estimate history.
What it would mean
If this plays out, it is a risk-off shock. A surprise BoJ hike plus Fed easing collapses the yen carry trade, snapping USD/JPY sharply stronger and forcing a global risk-asset deleveraging like the August-2024 unwind. The trigger decomposes into signed root‑shocks — Volatility (VIX) ▲ · FX carry appetite ▼ · Credit spreads ▲ · Risk appetite ▼ · Risk-parity deleveraging ▲ — which propagate through our causal graph to the markets below.
If it happens — the markets it would move
Biggest moves first. Projected moves are cascade-model priors; hist A–B% = what comparable past events actually did (measured abnormal returns), and model prior · unmeasured marks markets with no analogue backing yet. Tap any market for its price history.
| Market | Class | Projected move | |
|---|---|---|---|
| 1 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▼ -1.6% hist -1.69–-0.16% · other way +0.63% (n=12) |
| 2 | Volatility (VIX) VIXon Hyperliquid 📈 chart | Vol | ▲ +1.4% hist -3.12–+1.98% · other way -7.07% (n=12) |
| 3 | MicroStrategy MSTRon Hyperliquid 📈 chart | Equity | ▼ -1.3% hist -7.8–+0.96% · other way +23.24% (n=12) |
| 4 | Solana SOLon Hyperliquid 📈 chart | Crypto | ▼ -1.1% hist -12.38–+2.02% · other way -3.1% (n=10) |
| 5 | Tech sector XLK 📈 chart | Equity | ▼ -1.1% hist -0.76–-0.27% · other way +0.75% (n=12) |
| 6 | S&P 500 SPXon Hyperliquid 📈 chart | Index | ▼ -0.9% hist -0.64–+1.01% · other way +0.24% (n=12) |
| 7 | Hyperliquid (HYPE) HYPEon Hyperliquid | Crypto | ▼ -0.9% model prior · unmeasured |
| 8 | Ether ETHon Hyperliquid 📈 chart | Crypto | ▼ -0.8% hist -12.48–+1.11% · other way +2.79% (n=11) |
| 9 | High-yield credit HYG 📈 chart | Rate | ▼ -0.8% hist -0.63–-0.14% · other way -0.23% (n=12) |
| 10 | Bitcoin BTCon Hyperliquid 📈 chart | Crypto | ▼ -0.7% hist -5.22–+1.33% · other way +9.75% (n=11) |
| 11 | Semiconductors SMHon Hyperliquid 📈 chart | Equity | ▼ -0.7% hist -0.54–+0.07% · other way +3.44% (n=12) |
| 12 | Financials XLF 📈 chart | Equity | ▼ -0.5% hist -0.33–-0.19% · other way -0.27% (n=12) |
| 13 | Coinbase COINon Hyperliquid 📈 chart | Equity | ▼ -0.5% hist -2.71–+1.4% · other way +23.11% (n=10) |
| 14 | JPMorgan JPM 📈 chart | Equity | ▼ -0.4% hist -0.67–+0.04% · other way +0.99% (n=12) |
Probable recommendation
Historical precedent — what analogous events actually did
Across 40 analogous events (overlap‑weighted), as abnormal returns — market beta stripped, so it's the event's own effect, not the market backdrop. Shown at 20 days (persistent) and 5 days (immediate); ↺ fades = the two horizons disagree. Confidence = consistency × sample × significance.
| Asset | History says | Abnormal (20d · 5d) | Hit | n | Confidence | vs cascade |
|---|---|---|---|---|---|---|
| SOL SOL | SHORT | -10.1% · 5d -7.8% | 81% | 16 | 0.52 | ✓ matches cascade |
| ETH ETH | SHORT | -9.8% · 5d -6.0% | 77% | 22 | 0.43 | ✓ matches cascade |
| MSTR MSTR | SHORT | -6.1% · 5d -2.3% | 72% | 39 | 0.36 | ✓ matches cascade |
| INR INR | SHORT | -1.0% · 5d -0.0% | 68% | 38 | 0.33 | ✓ matches cascade |
| CNY CNY | SHORT | -0.4% · 5d -0.2% | 66% | 38 | 0.31 | ✓ matches cascade |
| TRY TRY | SHORT | -3.7% · 5d -0.1% | 63% | 38 | 0.26 | ✓ matches cascade |
| NDX NDX | SHORT | -0.9% · 5d -1.0% | 65% | 40 | 0.25 | ✓ matches cascade |
| SPX SPX | LONG | +1.3% · 5d -0.2% ↺ fades | 65% | 40 | 0.25 | ⚠ differs |
| AVGO AVGO | LONG | +2.1% · 5d -1.6% ↺ fades | 63% | 38 | 0.25 | ⚠ differs |
| Bitcoin BTC | SHORT | -4.4% · 5d -4.4% | 62% | 29 | 0.21 | ✓ matches cascade |
| MRVL MRVL | SHORT | -0.2% · 5d -2.4% | 62% | 39 | 0.21 | ✓ matches cascade |
| AUD AUD | SHORT | -0.5% · 5d -0.5% | 61% | 38 | 0.18 | ✓ matches cascade |
| QCOM QCOM | SHORT | -3.4% · 5d -2.5% | 62% | 40 | 0.17 | ✓ matches cascade |
| High-yield credit HYG | SHORT | -0.2% · 5d -0.1% | 61% | 38 | 0.16 | ✓ matches cascade |