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India on Brink of Military Conflict?

Our India Conflict Risk Index synthesizes market signals

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TL;DR:

  • India-Pakistan conflict odds surge, with 57.5% chance of military action before June. Markets peaked at 81% on April 29 after a deadly border skirmish, signaling escalation risks. The weighted India Conflict Risk Index at 19.6% underscores moderate but real concerns.
  • India-China tensions linger, with a 10.5% chance of a 2025 military clash. The shorter-term "by June 30" market at 5.0% suggests diplomacy may be holding immediate risks at bay. A clash could disrupt $4.8 trillion in trade, impacting global tech supply chains.
  • Weighted indexes sharpen geopolitical risk assessment. The India Conflict Risk Index, down to 19.6% from 33%, filters noise by prioritizing high-impact, liquid markets. This method previews a future where InfoFi traders can directly trade such aggregated risk metrics.
  • Trump’s third-term speculation holds steady at 6.5% announcement odds. The "bill passes House before June" market sits at 1.3%, with both showing cautious trader sentiment. This debate could deepen U.S. political divides and unsettle global trade dynamics.
  • Geopolitical risks carry high economic stakes. India-Pakistan tensions threaten $75 billion in trade, while a Trump third term could further strain US-EU trade deal odds. Markets highlight how news fuels tradable information across regions.

Market Snapshots

Event Breakdown

India on Brink of Military Conflict?: Tensions in South Asia are simmering, with prediction markets signaling heightened risks of military conflict involving India, Pakistan, and China. We’re tracking several key markets: "India invades Pakistan before July" (13.5%), "India military action against Pakistan before June" (57.5%), "India military strike on Pakistan by Friday?" (6.0%), "Pakistan reopens airspace to India before May?" (0.1%), "China x India military clash by June 30" (5.0%), and "China x India military clash in 2025" (10.5%). The following show these markets’ movements over the past week, with notable spikes—particularly "India military action against Pakistan before June" peaking at 81% on April 29 before pulling back to 57.5%.

To synthesize these signals, we’ve developed a weighted India Conflict Risk Index, which stands at 19.5% at the time of this writing, down from a peak of 33% on April 27. The index prioritizes near-term events, severe impacts, and higher liquidity markets. This approach offers a clearer picture of India’s conflict risk by balancing market signals, a method we believe will empower future InfoFi traders to trade such indexes directly, capturing aggregated probabilistic insights.

The real-world implications of these markets are profound. India-Pakistan tensions, rooted in decades of territorial disputes over Kashmir, have flared recently. A late-April skirmish along the Line of Control, reported by Reuters, killed three soldiers, fueling nationalist rhetoric. India military action against Pakistan before June market at 57.5% reflects trader concerns over escalation, especially as India’s elections loom, potentially pressuring leaders to act decisively. A full-scale invasion (13.5%) seems less likely, but even limited strikes could disrupt $75 billion in annual bilateral trade (per World Bank 2023 data), impacting regional stability and global supply chains, especially for textiles and agriculture.

On the China-India front, the "military clash in 2025" market at 10.5% points to longer-term risks along the disputed Himalayan border, where a 2020 clash killed 20 Indian soldiers. The shorter-term "by June 30" market at 5.0% suggests traders see immediate risks as lower, possibly due to ongoing diplomatic talks. However, a clash could ripple globally—India and China represent $4.8 trillion in combined trade (2023, World Bank). Escalation might disrupt tech supply chains, given China’s role in electronics and India’s growing IT sector, while also straining BRICS cooperation, affecting global economic forums.

The value of our weighted index lies in its ability to distill these markets into a single, actionable metric. By emphasizing time horizon, high-impact, liquid markets, it filters noise and highlights true risk signals—19.5% indicates moderate but real concern. In the InfoFi future, such indexes could be tradable assets, enabling investors to hedge geopolitical risks directly. For now, these markets offer a window into how news—border skirmishes, diplomatic moves—translates to tradable information. Track them on Polymarket for real-time updates as tensions evolve.

Related markets & forecasts:

Long-Tail Radar

Today, we’re spotlighting two long-tail markets from Polymarket capturing profound political speculation: "Trump announces run for 3rd term?" ($30.3K volume) and "Bill allowing Trump 3rd term passes House before June?" ($9.3K volume). Over the past month, the market for "Trump announces run for 3rd term?" has fluctuated modestly (given the volume) between 10% and 6%. While the "Bill allowing Trump 3rd term passes House before June?" market’s odds have tracked between %1-%3. 

In the last week, as shown in our visualizations, both markets held quite steady, reflecting cautious trader sentiment amid growing chatter.

These markets, though low in volume, signal a deeper societal debate. The 22nd Amendment limits U.S. presidents to two terms, but recent social commentary on platforms like X reveals a polarized discourse. Supporters argue Trump’s leadership style demands an exception, citing his influence on policy like tariffs and deregulation. Critics warn of democratic erosion, pointing to historical precedents like FDR’s four terms, which prompted the amendment in 1951. A bill to repeal this would require a two-thirds House majority and Senate approval—daunting odds, as the market’s ~1% suggests.

Domestically, a third term bid could deepen political divides. Trump’s base might rally, but opposition would likely intensify, potentially gridlocking Congress on issues like trade or immigration. Legal challenges would erupt, possibly reaching the Supreme Court, testing constitutional norms. Geopolitically, the implications are stark. Allies like the EU, already wary of Trump’s tariff policies, might hesitate on trade deals—note the "US-EU trade deal before June?" market currently at 29% (discussed in our recent newsletter). Adversaries like China could exploit U.S. political instability. A prolonged Trump tenure might also embolden populist movements globally, reshaping alliances.

These markets, though speculative, offer a lens into how news—here, political rumors—translates to tradable information. Their steady odds and modest volume suggest traders are watching for concrete moves, like a formal announcement or bill draft. Track them both on Polymarket for updates as this debate evolves.

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