Anchor Paper · Macro Lab

This calculator covers one of the three channels in the Macro Shock Architecture. Read The Anatomy of a Crisis → for the overarching framework that ties commodity, credit, and policy shocks into a single architecture, with bridges to every related paper.

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Macro Lab · Shock Simulator

Policy Shock Calculator

Central bank surprises markets with policy move. Watch inflation expectations, equities, spreads, currency, and growth react in real-time.

Policy Rate Shock

0 bps

-100 bps (Dovish cut) 0 bps (No surprise) +100 bps (Hawkish hike)

⚠ No shock. Markets pricing base case.

Direct Impact: Policy Rate

Base Rate

5.00%

→

New Rate

5.00%

Inflation Expectations

Dovish CB → inflation fears

3.50%

↑ 0.00

Real Rates

Policy minus inflation expectations

1.50%

↑ 0.00

Equity Market

PE expansion from lower rates

0.0%

↑ 0.00

Growth Outlook

Growth relief from stimulus

2.50%

↑ 0.00

Credit Spreads (OAS)

Spread Level 150 bps

Widened 0 bps

Dovish shock → liquidity relief → credit tightens. Yield chase resumes, leverage rebuilds.

Currency Response

Index Level 100.0

Appreciated 0.0 pts

Lower rates drive outflows. Currency weakens, exporters benefit.

EPS Growth Expectations

Lower rates ease financing costs

8.00%

↑ 0.00

Volatility (VIX-like)

Dovish calms markets

15.0

↓ 0.00

Long-Term Bond Yield

Current

5.00%

10Y equivalent

Yield falls sharply. Flight to bonds, curve steepens. Negative real rates likely.

Shock Transmission Summary

Step 1: Shock

Central bank surprises with policy move. Market reprices rate expectations immediately (futures markets).

Step 2: Inflation

Hawkish → inflation expectations fall (CB credible). Dovish → inflation expectations rise (CB worried).

Step 3: Real Rates

Policy + inflation move determine real rates (discount rate for equities). Higher real rates = PE compression.

Step 4: Equities

Real rate move hits equities immediately. Growth concerns magnify hawkish shock impact (non-linear).

Step 5: Credit

Equity weakness → credit stress → spreads widen (or tighten on dovish relief). IG underperforms HY on hawkish.

Step 6: Currency

Higher rates → capital inflow → currency appreciates. Exporters hurt. Lower rates → depreciation → export benefit.

NextLevel Education Private Limited · ARN-XXXXXX · Illustrative macroeconomic model for education and advisor training. Real-world outcomes depend on forward guidance credibility, market positioning, liquidity conditions, and geopolitical context.