Ongoing U.S.-mediated direct peace talks between Israel and Lebanon, resuming in Washington on May 14 amid a fragile ceasefire extended multiple times since April 16, have failed to halt Israeli strikes targeting Hezbollah in southern Lebanon, with over 380 deaths reported since the truce began, including 22 on May 13. Lebanese Prime Minister Nawaf Salam recently emphasized seeking peace—complete Israeli withdrawal and Hezbollah curbs—without diplomatic normalization, while Israel insists on Hezbollah disarmament and border security guarantees. Absent national consensus in Lebanon against normalization and persistent Hezbollah influence, traders price a 79% implied probability against full diplomatic relations by December 31, 2026, viewing current diplomacy as insufficient for such a breakthrough despite historic engagement.