Israel Bonds Rally on Surprise Inflation Drop as Truce Bid Grows

Israel’s benchmark bonds rallied, pushing the yield down the most in almost three weeks, as a surprise drop in inflation spurred demand and regional leaders raced to broker a truce between Israelis and Palestinians.

The yield on the 5.5 percent Mimshal Shiklit bonds due January 2022 fell six basis points, or 0.06 percentage point, the biggest decline since Oct. 30, to 3.95 percent at the close in Tel Aviv. The two-year break-even rate, the yield difference between the inflation-linked bonds and fixed-rate government notes of similar maturity, slumped 28 basis points to 205, implying an average annual inflation rate of 2.05 percent.