Possible scenario
Retaliatory Escalation
17% Chance
Riyadh, potentially with U.S. intelligence and logistical support, moves from defensive reinforcement to offensive action against Houthi launch infrastructure in Yemen. This is less likely than defensive containment because Saudi Arabia has strong incentives to avoid a wider Gulf conflict, but repeated hits on energy assets increase pressure to respond.
Initial impacts
- Riskier companies' borrowing costs Up
- Market volatility Up
- 10-year Treasury yield Down
- Oil prices Up
- US dollar Up
Secondary impacts
- Energy +2.9%
Portfolio impact
S&P 500-1.4%
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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