Israeli 2026 government bonds rose, pushing the yield to the lowest level in more than a week, after a report showing weaker U.S. retail sales stoked concern the world’s largest economy is cooling.
The yield on the 6.25 percent notes due October 2026 declined one basis point, or 0.01 percentage point, to 4.9 percent, the lowest since June 5, at the close in Tel Aviv. The one-year break-even rate, the yield difference between the inflation-linked bond and fixed-rate government bonds of similar maturity, fell four basis points to 246, implying an average annual inflation rate of about 2.46 percent.
Treasuries rose after retail sales in the U.S. fell in May for a second month as slower employment and subdued wage gains damped demand. About 40 percent of the Israel’s gross domestic product is made up of exports, with Europe and the U.S. the largest markets.
“Yields retreated at the end of the trading day tracking their U.S. counterpart on weak economic data, increasing concern over a recovery in the global economy,” said Sagie Poznerson, head of trading at Leader Capital Markets Ltd. in Tel Aviv.
Economic growth in Israel is expected to slow to 3.1 percent this year from 4.8 percent in 2011, according to central bank estimates. One-year interest rate swaps, an indicator of investor expectations for the benchmark rate in the period, increased one basis point to 2.26 percent.
The Tel Aviv Bond 40 Index, which measures inflation-linked and fixed-rate corporate bonds, declined 0.4 percent to 263.48. The shekel appreciated 0.2 percent to 3.8721 a dollar at 5:38 p.m. in Tel Aviv, taking this month’s gain to 0.9 percent.
The yield on the 5.5 percent Mimshal Shiklit notes due January 2022 rose one basis point to 4.44 percent.