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Bethel Finance news:
Israeli consumer price index-linked bonds declined, pushing yields to the highest level in a week, on speculation inflation will remain within the government’s target range after the central bank held borrowing costs.
The yield on the inflation-linked notes maturing in June 2014 climbed four basis points, or 0.04 percentage point, to 0.69 percent at 11:10 a.m. in Tel Aviv, the highest since Dec. 20. The rate on the consumer price-linked bonds due April 2018 rose two basis points to 1.51 percent.
“There was nothing dramatic in the decision, we’re going to continue in a low inflation environment with a global recession and global interest rates staying low,” said Moshik Yaniv, head of the local fixed-income desk at Migdal Capital Markets Ltd. in Tel Aviv.
The Bank of Israel yesterday maintained its benchmark interest rate at 2.75 percent after reducing it twice in three months, saying the economy was expanding and that policy makers wanted to be able to react to future developments. Eight out of 20 economists surveyed by Bloomberg forecast the decision, while 12 predicted a quarter-point decrease. The bank lowered its 2012 growth forecast to 2.8 percent from a September prediction of 3.2 percent, citing the European debt crisis.
November inflation slowed to 2.6 percent, the third month this year that the rate is within the government’s 1 percent to 3 percent target range. The two-year break-even rate, the yield difference between inflation-linked bonds and fixed-rate government bonds of similar maturity, rose four basis points to 197, implying an average annual inflation rate of 1.97 percent.
The yield on the benchmark 5.5 percent notes due in January 2022 rose three basis points to 4.56 percent. The shekel weakened 0.3 percent to 3.7874 a dollar.
The Tel Aviv Bond 40 Index, which measures inflation-linked and fixed-rate corporate bonds, rose less than 0.1 percent to 257.11.
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