Possible scenario
Regional Escalation
20% Chance
The Saudi plan triggers a Houthi response against shipping, Saudi territory, or UAE-linked infrastructure, forcing outside navies and insurers to reassess Red Sea exposure. This is less likely than containment but remains a meaningful tail risk because Bab el Mandeb is a strategic chokepoint and the Houthis have used anti-ship weapons before.
Initial impacts
- Riskier companies' borrowing costs Up
- Market volatility Up
- 10-year Treasury yield Down
- Oil prices Up
- US dollar Up
Secondary impacts
- Energy +3.0%
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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