Traders assign a 97.4% probability to no U.S. invasion of Mexico in 2026 due to sustained diplomatic engagement, economic interdependence through the USMCA framework under joint review, and continued bilateral security cooperation on migration and fentanyl trafficking. Recent developments, including tariff negotiations resolved through talks and a July 2026 incident involving U.S. immigration enforcement that prompted Mexican diplomatic responses, have heightened tensions without producing military mobilization or congressional authorization for large-scale operations. Mexican sovereignty concerns and the high costs of escalation further anchor market sentiment. While limited strikes against designated cartels remain a discussed option in some U.S. statements, full invasion would require major shifts such as a breakdown in cooperation or an acute cross-border security crisis to alter the current consensus.