Iran prepares forces for potential conflict expansion with US

Intercepted communications and intelligence reports indicate a strategic shift by Iran’s hard-line leaders to prepare their forces for a potential expansion of the ongoing conflict with the United States. This development suggests a move towards increasing the pressure on U.S. forces and allies in the region. The conflict, which has been active since February 2026, has seen various military actions including strikes on shipping and regional targets. Iran’s preparation of missiles, drones, and militia coordination points to a potential escalation beyond deterrence. This situation appears to be contributing to market participants’ perceptions of decreased likelihood for a US-Iran deal on reconstruction funding in 2026. Key Takeaways Intelligence reports suggest a strategic shift by Iran towards expanding the conflict, which appears to increase regional tensions. Market pricing reflects a decrease in confidence regarding the inclusion of Iran reconstruction funding in a US-Iran deal by year-end 2026. Current market odds show a decline in the probability of a US-Iran deal including key terms like uranium enrichment caps or moratoriums. What to Watch Attention remains on potential escal...