Israel’s short-term government bonds rose, pushing yields lower for the first time in eight days, as demand for the country’s safer assets increased amid violence in the south.
The yield on the 3.5 percent notes due September 2013 fell nine basis points, or 0.09 percentage point, to 2.63 percent, the lowest since Feb. 29, at the 4:30 p.m. close in Tel Aviv. The yield on the 5.5 percent notes retreated three basis points to 4.71 percent. The TA-25 benchmark stock index dropped the most in almost one week, declining 1.1 percent.
Israeli air strikes on the Hamas-controlled Gaza Strip killed three Palestinians as the death toll in the area over four days of conflict rose to 21. Prime Minister Benjamin Netanyahu said that “the army continues to strike at the terrorists in Gaza with strength and resoluteness.”
“Investors are shortening positions and reducing risk to local assets as violence in the south of the country continues heightening geopolitical risk,” said Guy Lazarovich, a bond trader at IBI-Israel Brokerage & Investments Ltd.
The Finance Ministry sold a total of 1.25 billion shekels ($330 million) of bonds at an auction today, according to ministry data posted on Bloomberg. Investors sought 4.6 times the 250 million shekels of the January 2022 benchmark bonds offered, compared with 5.3 times at last week’s sale.
One-year interest-rate swaps, an indicator of investor expectations for rates over the period, fell less than one basis point to 2.55 percent. The Tel-Bond 40 Index (TEL-B40) of corporate bonds gained 0.1 to 262.69. The shekel strengthened 0.2 percent to 3.7866 a dollar.
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