Recent Democratic gains in the 2026 midterms, delivering control of both congressional chambers, have solidified trader expectations for a party sweep, yet the Gaza ceasefire Phase II remains stalled. Implementation of disarmament, verified withdrawal beyond the Yellow Line, National Committee for the Administration of Gaza authority, and reconstruction under the Board of Peace has seen minimal progress since the October 2025 Phase I agreement, with persistent Israeli restrictions on aid, ongoing strikes, sequencing disputes, and Hamas compliance uncertainties blocking advancement. These barriers, including Netanyahu’s insistence on full disarmament prior to major concessions and delays tied to Israeli elections, have kept the joint outcome of a sweep plus a completed Phase II deal by December 2027 at low implied probability, while positioning the sweep without Phase II resolution as the dominant scenario in market pricing. Upcoming diplomatic talks in Cairo and potential shifts in U.S. congressional oversight represent limited catalysts that could still influence timelines.