Israeli 10-Year Bonds Decline as Consumer Protests Intensify
Israel’s 10-year government bonds fell amid concern widening public protests against rising housing and living costs may force the government to borrow more money.
The yield on the benchmark 5 percent Mimshal Shiklit bond due in January 2020 gained two basis points, or 0.02 percentage point, to 5.02 percent at 2:29 p.m. in Tel Aviv. The rate has declined 14 basis points this month. A Standard & Poor’s team that met with Finance Minister Yuval Steinitz last week expressed concern the budget deficit may swell as the government raises spending to respond to protesters’ demands, harming the country’s credit rating, Ma’ariv reported. It didn’t say where it got the information.
“Growing protests over rising prices increase pressure on the government to act,” Ehud Itzhakov, a bond trader at Bank Hapoalim Ltd. in Tel Aviv, said by telephone. “There is concern in the market the government may need to raise more debt, which is creating uncertainty about the deficit. Investors are likely to sell long-term debt and take profits today.”
More than 100,000 Israelis rallied in Tel Aviv, Jerusalem, Haifa and other cities last night to demand affordable housing. Haim Shani, director general of the Finance Ministry, resigned today after a series of disagreements with Finance Minister Yuval Steinitz.
Prime Minister Benjamin Netanyahu said today he will name a team of ministers to listen to the public and put together a plan that will be brought to the cabinet. Home prices rose 13.7 percent in the 12 months through April-May, the Central Bureau of Statistics reported July 15. Netanyahu on July 26 announced a plan to increase the supply of housing to offset rising property prices and appease protesters.
The demonstrations are the latest in a series of consumer protests that started over the rising cost of cottage cheese. The outcry prompted dairy companies, including Strauss Group Ltd. (STRS), to lower prices. The Ministry of Industry, Trade, and Labor said July 27 the dairy market will be opened to more competition and imports in an effort to bring down prices.
The shekel strengthened 0.1 percent to 3.4210 against the dollar on July 29, trimming the decline this month to 0.6 percent.
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