Bourse (vecteezy photography)
Towards the start of the trading day in Tel Aviv and more importantly towards the start of the trading week in New York, futures contracts on the leading New York stock indices are plunging more than 1.4%, which means that at least right now, investors around the world are expecting another sharp decline in New York. US government bond yields rise to a level of 3.172%, a level that is a very heavy weight on the markets.
Recall that the last time bond yields were at such high levels, at the 3.2% level an equilibrium point was observed where investors began to purchase government bonds and halted the process of rising yields.
More in-
In Tel Aviv, investors are preparing for an aggressive operation by the Federal Reserve and are stocking up on dollars and the American currency, which is generally considered a safe haven for cash, rising sharply by 1.4% and trading at NIS 3,147.
Another thing to keep in mind, due to the fact that Israeli institutional investors are in a defensive position, is due to the fact that in recent days there have been sharp declines in New York (and especially on NASDAQ) they buy dollars to (in principle) maintain their dollar exposure in accordance with investment committee policy High exposure to overseas markets.
It is not surprising that the process of declining markets escalated last Friday when US inflation data were released pointing to the fact that inflation is too strong to be curbed in the process of raising one (or even two) interest rates which means the Federal Reserve will have to be much more aggressive. Faster and at sharper rates.
This process causes, at least in theory, an increase in bond yields so investors currently prefer to sell goods (and maybe even save some of last year’s profits) and wait for the bond market to stabilize so it will be possible to enter the market at even higher rated corporate yields of 4%, risk-free returns that until yesterday were a distant dream.
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