"Although we don’t yet expect another interest rate cut in the next two months, this is no small matter (only a 60% probability)," says Leader Capital Markets analyst Yonatan Katz in his weekly market review today. He predicts that pressure to cut the interest rate will increase after the Consumer Price Index (CPI) for June is published, which will show a 12-month inflation rate of just 0.5%.
The Central Bureau of Statistics will publish the CPI for June on July 15.
Leader says that the macroeconomic data published this week will be very important: the CPI for May will be published today, and the GDP update will be published tomorrow. Economics expect GDP for the first quarter to be revised upward to 2.5-2.7% from 2.1%.
Leader expects the Ministry of Finance to raise only NIS 60 billion in tradable bonds this year. It expects issues of tradable bonds to decline in the coming years in general. The reduced bond supply will lower market yields. It cautions, however, "It is important to remember that there has been a corresponding drop in demand for tradable bonds by pension funds, so there should be no material effect on yields in the bond market."
Published by Globes [online], Israel business news - www.globes-online.com - on June 15, 2014
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