President Donald Trump has formally notified Congress of the resumption of hostilities with Iran, indicating an end to the interim ceasefire that had been in place since April 2026. This development follows Iranian attacks on commercial tankers in the Strait of Hormuz and subsequent U.S. airstrikes on Iranian military targets. The conflict, which began earlier this year, has escalated with recent retaliatory measures by Iran, including missile and drone strikes on U.S. bases in the Middle East. These events mark the return to full-scale combat operations under the U.S. military’s Operation Epic Fury.
Market participants appear to interpret this significant escalation as decreasing the likelihood of a US-Iran deal that includes reconstruction funding in 2026. The odds for such a deal have already seen a notable decline, with sub-market pricing reflecting a reduced probability of favorable outcomes. Current market data suggests a downward shift in support for scenarios involving reconstruction funding, with several active sub-markets experiencing a drop in YES pricing over the past week.
Key Takeaways
Trump’s notification to Congress appears to reduce the likelihood of a US-Iran deal including reconstruction funding in 2026.
