**Ongoing implementation challenges with the June 2026 US-brokered framework agreement continue to shape trader views on Israel-Lebanon normalization.** The trilateral deal established a sequenced process linking gradual Israeli redeployments from southern "pilot zones" to Lebanese army deployment and verified Hezbollah disarmament, while affirming mutual sovereignty recognition. Hezbollah has rejected the accord as null and void and refused to disarm, maintaining its military infrastructure and influence. As of mid-September 2026, progress remains limited to initial pilot zones under Lebanese control, with further talks postponed to October and persistent Israeli security requirements tied to verifiable threat reductions. These structural obstacles—Hezbollah's entrenched position, conditional withdrawal terms, and Lebanon's internal political constraints—sustain the strong market consensus against full diplomatic normalization, including formal relations and a comprehensive peace framework, materializing before the end of 2026.