Possible scenario
Regional Escalation
25% Chance
Eritrean involvement expands the war beyond a federal-TPLF confrontation and increases the risk to Afar, the Djibouti trade corridor, and Red Sea-adjacent security. This would be a more material geopolitical escalation, though still not a systemic global shock unless shipping routes are disrupted.
Initial impacts
- Market volatility Up
- Riskier companies' borrowing costs Up
- 10-year Treasury yield Down
- Oil prices Up
- US dollar Up
Secondary impacts
- Consumer Services -0.2%
Portfolio impact
S&P 500-0.3%
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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