Israel 10-Year Bond Yields Rise to 2-Week High on Inflation, Rate Bets

Israel’s 10-year government bond yields climbed to the highest level in more than two weeks on bets inflation accelerated in May, increasing the likelihood the central bank will boost interest rates this month.

Yields rose to the highest since May 25 as the median estimate of 12 economists in a Bloomberg survey forecast annual inflation may quicken to 4.2 percent in May from 4 percent in April. The yield gap between inflation-linked bonds due June 2012 and fixed-rate notes of similar maturity has widened 12 basis points, or 0.12 percentage point, to 350.1 since May 16, a day after the statistics bureau said April inflation slowed from 4.3 percent the previous month. That implies expected inflation of 3.5 percent, up from about 3.4 percent.