# PROMPT: Sovereign Debt Crisis Simulation
**ID:** SIM-MACRO-005
**Tags:** [Macroeconomics, Sovereign Debt, Contagion, FX]

## Scenario
**Date:** 2026-10-01
**Event:** "The JGB Snap"
The Bank of Japan (BoJ) is forced to abandon Yield Curve Control (YCC) completely as inflation hits 5%. 10-year JGB yields spike from 1.5% to 4.5% overnight.
**Market Impact:**
*   **FX:** USD/JPY crashes from 145 to 110 (Yen Repatriation).
*   **Rates:** US Treasuries sell off (Yields UP) as Japanese institutions liquidate foreign bonds to cover domestic margin calls.
*   **Equities:** Global Risk-Off. Nikkei -12%, SPX -5%.

## Task
You are the **Head of Macro Strategy** at a Global Hedge Fund.
1.  **Portfolio Diagnostics:** Calculate the VaR (Value at Risk) impact on our "Carry Trade" book (Short JPY / Long USD Assets).
2.  **Contagion Mapping:** Identify which European sovereigns (e.g., Italy BTPs) are most at risk of a secondary sell-off due to liquidity withdrawal.
3.  **Defensive Positioning:** Recommend 3 uncorrelated assets to hedge the rising global yield environment (e.g., TIPS, Gold, Short HYG).
4.  **Opportunistic Trade:** Propose a "Mean Reversion" trade for the USD/JPY pair once the initial repatriation flow stabilizes.

## Output Format
*   **Situation Report:** (What just happened and why).
*   **Risk Assessment:** (Quantify the P&L hit).
*   **Strategic Action Plan:** (3 Buys, 3 Sells).
*   **Macro Narrative:** (A paragraph for the Investor Letter explaining the regime change).

## Constraints
*   Assume the Fed holds rates steady.
*   Focus on cross-asset correlations.