A "Closed Stream" error when running a deployment, would suggest that your server is closing the connection. We would recommend checking your server SFTP logs for some further information.
We have found in the past that the SFTP process can actually shutdown in these cases, which is why the connection doesn't resume.
You would usually only see this error when running an initial, large deployment, during the file transfer process.
If your files already exist on the server you could try and skip the initial deployment, then future deployments should just upload the changed files.