Trump claims Xi will not arm Iran, signaling potential diplomatic easing

Trump claimed Xi Jinping will not arm Iran, a statement that could signal diplomatic easing. The probability of a U.S. declaration of war on Iran by December 31 is at 7.5% YES, down from 8% a week ago.

The market barely moved on Trump’s statement. Odds for a U.S. declaration of war by April 30 remain at 0.8% YES. The gap between the April and December markets suggests traders price more risk into the second half of the year. Both markets have low liquidity: only $163 in daily USDC volume for December and $197 for April, meaning any sizable order could move odds quickly.

The market on Trump agreeing to Iranian oil sanction relief in April dropped to 36% YES, from 38% yesterday. This market trades $5,843 in daily USDC volume and reacts to developments in U.S.-Iran negotiations, particularly around oil sanctions.

Trump’s claim is consistent with China’s public denials of arming Iran, but without concrete actions or agreements, the statement is speculative. At 8¢, a YES share for a U.S. declaration of war by December 31 pays $1, a potential 12.5x return. Buyers would need to expect a serious U.S.-Iran escalation to justify that bet.

Watch for further statements from Trump and Xi, particularly around their upcoming summit in Beijing. A confirmed diplomatic channel or concrete de-escalation steps could push war odds lower.

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