Israeli and Hamas officials reached a Phase I ceasefire in late 2025 that included hostage releases and partial Israeli withdrawals to the Yellow Line, yet Phase II implementation has stalled since early 2026 over sequencing disputes. Israel insists on full Hamas disarmament and demilitarization before further withdrawals or reconstruction, while Hamas conditions weapons decommissioning on reciprocal Israeli pullbacks, entry of alternative Palestinian governance, and verified reconstruction progress under the US-backed Board of Peace. Ongoing IDF strikes targeting Hamas operatives, limited aid flows, and Israeli postponement of police training and stabilization force steps until after the October 2026 elections have reinforced the deadlock, with mediators reporting no substantive talks for over a month. These barriers have kept trader-implied probabilities for near-term Phase II agreements low.