Ongoing military tensions and stalled implementation of the June 2026 U.S.-brokered trilateral framework agreement continue to anchor trader expectations against normalization before 2027. Israeli forces maintain positions in southern Lebanon, conduct repeated airstrikes, and face Hezbollah rebuilding efforts, while the group rejects disarmament until full withdrawal occurs. Lebanese officials, including President Joseph Aoun and Speaker Nabih Berri, distinguish security arrangements from any path to diplomatic relations or peace treaties, with talks remaining indirect and narrowly focused on border issues. Hezbollah’s political influence inside Lebanon and external ties further complicate sequencing. Although scheduled rounds of U.S.-facilitated discussions and potential post-election shifts in Israel represent possible catalysts, the combination of occupation, unresolved weapons stockpiles, and domestic constraints sustains the overwhelming market consensus against near-term normalization.