Israeli Stock Exchange Shines as US Treasury Yields Nudge 5% Amid Inflation
Pasternak-Shaham's weekly review covers the robust Israeli stock market performance, surging US Treasury yields approaching 5%, inflation metrics, and major tech earnings.
The Pasternak-Shaham investment house has released its weekly economic review, highlighting the opening of the trading year in Israel, the performance of the Tel Aviv Stock Exchange (TASE), surging US Treasury yields, the Consumer Price Index (CPI), and tech giant earnings reports.
Strong Market Performance and US Bond Yields
Opening the Hebrew year following a very robust period domestically, the Tel Aviv 35 Index surged by 41.5% and the Tel Aviv 125 Index climbed by 36%, positioning the TASE among the strongest markets globally. The US dollar concluded the year around 3.25 NIS, while the Bank of Israel interest rate decreased within less than a year from 4.5% to 3.25%.
"The US bond market remains the central event of the week, with the 10-year US Treasury yield climbing by approximately 20 basis points within a week to finish Friday around 4.96%–4.98%, approaching the psychological 5% threshold—the highest level since 2023."
Inflation Drivers and Energy Markets
What drove yields upward? A combination of high oil prices, elevated refining margins, expectations of interest rate hikes, and sticky inflation. Brent crude jumped by 8.7% weekly to 104.6 dollars per barrel, compounded by the shutdown of Saudi Arabia's primary oil pipeline following a drone attack. Meanwhile, the August CPI rose by 0.4%, keeping annual inflation at 3.4%.
Markets are now pricing in a high probability of a Federal Reserve interest rate hike, while investors closely monitor incoming macroeconomic data and tech sector reports from companies like Oracle and Adobe.
