Recent diplomatic engagement, including the September 2026 Trump-Xi summit and subsequent pursuit of a military crisis-communication memorandum, has reinforced channels to manage encounters in the Indo-Pacific and lower risks of miscalculation. Traders price in sustained deterrence from mutual economic interdependence, established military balances favoring neither side in a high-intensity clash, and consistent patterns of gray-zone activity without direct US-China confrontation. Ongoing South China Sea and Taiwan Strait frictions continue under managed conditions, with both sides prioritizing de-escalation mechanisms over escalation. A sudden shift could still arise from intensified incidents involving US allies, rapid policy changes, or unintended escalation in contested waters.