Washington is telling markets the odds of a war over Taiwan before 2027 are lower than investors think — reassuring for anyone pricing in that risk, though it rests on deterrence holding.

• A senior US State Department official for East Asia says Taiwan is the single most mispriced risk and that fears of a clash in the Taiwan Strait are overblown.
• The reasoning: neither Beijing nor Washington wants a war, and the US and its allies can deter one.
• Xi Jinping is described as a rational actor who will not move if he sees that taking Taiwan is impossible, or impossible without severe consequences.
• The US has long said Beijing told its military to be ready for action against Taiwan by 2027, a timeline China has never publicly confirmed.
• The whole argument hinges on keeping that deterrence credible — the warning inside the reassurance.

Outlook: Expect Washington to keep pushing the "don't overprice Taiwan risk" message while quietly building up allied military deterrence in the region.