Possible scenario
Open Regional Conflict
20% Chance
The collapse of Ethiopia-Eritrea ties and Abiy’s renewed Red Sea pledge produce a direct military confrontation. The most plausible flashpoint is the Afar-Eritrea frontier or the Bure-Assab corridor, with Somalia and outside powers drawn in diplomatically or indirectly.
Initial impacts
- Market volatility Up
- Riskier companies' borrowing costs Up
- 10-year Treasury yield Down
- Oil prices Up
- US dollar Up
Secondary impacts
- Energy +1.2%
- Industrials
Portfolio impact
S&P 500-1.2%
Each figure is the modeled move of the S&P 500 if the outcome occurs. For information only. Not investment advice.
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