US leaves Middle Eastern ally hanging after halting air strikes on Yemen’s Houthis

The United States has reportedly halted plans to conduct air strikes against the Houthi movement in Yemen, a decision that marks a shift from earlier considerations of military action. This development follows a period of escalated conflict in the region, where the Houthi forces have been advancing against the Saudi-led coalition. The U.S. had previously been involved in supporting Saudi Arabia politically and through intelligence, but has refrained from direct military intervention in recent times. The decision to avoid air strikes is consistent with a lower escalation level, maintaining the ceasefire agreed upon in May 2025 that ended a previous U.S. strike campaign. The market for the potential fall of the Iranian regime appears to interpret this decision as a stabilizing factor in the Middle East, potentially decreasing the perceived likelihood of instability that might lead to regime change in Iran. Current pricing for the market on whether the Iranian regime will fall before the end of 2026 has seen a slight decrease, with the odds now standing at 6.5% for a YES resolution. This suggests that market participants view the U.S. restraint as a factor that could contribute to reg...