Israel-Hezbollah ceasefire collapse at 44% on Polymarket but Israeli defense names not yet re-rated

This is Angle C — a 7-day drift with no identifiable public catalyst. The Israel-Hezbollah ceasefire was announced April 16, 2026 as a 10-day agreement. The extension probability on Polymarket was 77.5% just one week ago; it now sits at 44.5%, a -33pp collapse. Critically, there has been no single publicly-reported breakdown in talks, no leaked diplomatic cable, and no official statement from either side explaining the deterioration. This is the pattern of informed flow: participants with access to backchannel diplomatic intelligence, IDF briefings, or Hezbollah-linked sources are pricing in a non-extension before it becomes public. The 24h volume of $337k on a $55k liquidity pool is also anomalous — it signals aggressive directional positioning, not passive market-making. The equity transmission is direct and has not fired. WTI crude is +12.6% on the week, which partially reflects regional risk, but defense equities — the cleaner, higher-conviction play on renewed hostilities — have not moved commensurately. BAE Systems (BA.L) is a top-5 global defense contractor with direct sales to Israel and NATO allies who would immediately accelerate procurement in a re-escalation scenario. Mitsubishi Heavy Industries (7011.T) benefits from Japan's own defense buildup, which is correlated with global threat-environment deterioration. Neither has gapped. The equity market is treating this as a temporary ceasefire wobble; the prediction market is pricing a breakdown. When the ceasefire formally fails to extend — if the insiders are right — the news will be unambiguous: Israeli artillery resumes, Hezbollah launches, and every defense contractor with Middle East exposure re-rates within hours. This is not a trade you exit before the news; the announcement IS the catalyst for the equity move. The informed-flow thesis survives the news breaking.