October 29, 2012–Israeli benchmark bonds rose, pushing the yield to the lowest in almost three months, on speculation the central bank will keep borrowing costs unchanged today to stimulate the economy.

The yield on the 5.5 percent Mimshal Shiklit notes maturing in January 2022 fell three basis points, or 0.03 percentage point, to 4.05 percent at 1:20 p.m. in Tel Aviv, the lowest level since Aug. 6. One-year interest-rate swaps, an indicator of investor expectations for rates over the period, dropped three basis points to 2.11 percent, the lowest since Aug. 29.

Policy makers will probably keep the key interest rate unchanged today at 2.25 percent for a fourth consecutive month, according to all 24 analysts surveyed by Bloomberg. Israel’s economic growth is set to decline to 3.5 percent this year from 4.6 percent in 2011, according to statistics bureau estimates, as Europe contends with a debt crisis and global growth slows. Exports comprise 40 percent of Israel’s gross domestic product, and Europe is one its top markets.

“The Bank of Israel is expected to leave interest rates low for a longer period as the economy grows at a moderate pace and inflation is intact,” said Alex Zabezhinsky, chief economist at DS Securities & Investments Ltd. in Tel Aviv. “This environment is giving preference to longer-term bonds over shorter-term.”…Read More>>

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