Houthis Enter War and Say Attacks on Iran, Hezbollah Must Stop

Houthis launched ballistic missiles at Israel and stated they will continue operations until strikes on Iran and its proxy groups stop. This is a meaningful regional escalation that is likely to trigger risk-off flows, lift oil and shipping risk premia, and increase volatility in emerging-market assets and regional currencies. Portfolio actions to consider: hedge oil exposure, reduce cyclical EM risk, and increase defensive/quality allocations while monitoring energy prices and shipping-lane disruptions.

Analysis

Houthis launched ballistic missiles at Israel and stated they will continue operations until strikes on Iran and its proxy groups stop. This is a meaningful regional escalation that is likely to trigger risk-off flows, lift oil and shipping risk premia, and increase volatility in emerging-market assets and regional currencies. Portfolio actions to consider: hedge oil exposure, reduce cyclical EM risk, and increase defensive/quality allocations while monitoring energy prices and shipping-lane disruptions.