Possible scenario
Regional Escalation
20% Chance
Washington and Riyadh conclude that defensive measures are insufficient and move toward direct military action against Houthi launch infrastructure. The risk premium rises because markets see greater odds of Iranian retaliation, wider Red Sea disruption, or further Saudi energy attacks.
Initial impacts
- Riskier companies' borrowing costs Up
- Market volatility Up
- 10-year Treasury yield Down
- Oil prices Up
- US dollar Up
Secondary impacts
- Energy +4.5%
Portfolio impact
S&P 500-2.0%
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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