Possible scenario
Eritrean Escalation
20% Chance
The breakdown of Ethiopia-Eritrea ties and renewed fighting in Tigray pull Eritrea closer to the conflict. This is less likely than an internal insurgency but remains a serious risk because Asmara has previously intervened in Tigray and views the TPLF as a core security threat.
Initial impacts
- Market volatility Up
- Riskier companies' borrowing costs Up
- Oil prices Up
- 10-year Treasury yield Down
- US dollar Up
Secondary impacts
- Energy +0.4%
Portfolio impact
S&P 500-0.9%
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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