Traders assign a 97.5% probability to no U.S. invasion of Mexico in 2026 due to sustained diplomatic engagement, including bilateral security talks and USMCA reviews, alongside Mexico’s consistent rejection of unilateral military action on its territory. Rhetoric from U.S. officials has centered on targeted counter-narcotics measures against cartels rather than territorial occupation or regime change, consistent with historical precedent and the absence of congressional authorization or troop deployments for such a purpose. Escalation remains improbable given deep economic integration and shared interests in migration and trade. Limited joint operations or intensified strikes could still emerge if cooperation falters, though these would fall short of the market’s invasion threshold.