Five Macroeconomic Forces Set to Shape Global and Israeli Markets
Calcalist's Money Engines podcast outlines five macroeconomic forces shaping global and Israeli markets, from US bond yields and oil to local budget deficits.
The global and local economy is approaching a boiling point, and the upcoming year will reshape investment portfolios. In episode 395 of Calcalist's "Money Engines" podcast, chief economist and strategist Ori Greenfeld of Psagot Leaderim outlined five macroeconomic forces that will dictate market trends.
Bond Market Volatility and Oil Prices
Yields in the global bond market refuse to drop. The yield on the 10-year US Treasury note has hit a high not seen since November 2023, driven by oil prices returning to $100 per barrel. Energy price hikes are fueling inflation expectations and demanding adequate compensation from investors.
The Dollar Stagnation and Israeli Anomaly
Despite expectations of US rate hikes, the global dollar remains relatively stable because other currency blocs, such as Europe and Japan, are also forced to raise borrowing costs. Meanwhile, in an Israeli anomaly, while global yields are rising, Israel's 10-year government bond yield has actually dropped.
Budget Pressures and the AI Labor Market
A demand for a 300 billion shekel addition to the defense budget over the decade—without tax hikes or sweeping cuts—could drag the economy into a baseline deficit of 6%. In the labor market, fears of mass unemployment have shifted to a model of hiring freezes alongside employee retention. Concurrently, while companies report productivity gains, surveys show that 31% of the public is concerned about the pace of technological development.
"The global and local economy is approaching a boiling point, and the upcoming year will reshape investment portfolios."
