Dudi Resnik, Leumi Capital Markets’ interest rate strategist:
“In recent days we have witnessed relatively turbulent trading in the government bond markets. The trend began in the US, where long-term government yields have risen sharply recently, amid fears of a rise in the inflation environment and fears of a faster-than-expected response from the Fed. As a result, 10-year US bond yields climbed to about 1.35% from about 1 percent over the past month. At the same time, in Israel the shekel yield climbed to 10 years, from 0.8% to about 1.1% during this period.
“The rise in yields led to a decline in stock markets, with an emphasis on the technology sector, amid fears that a rise in yields may herald a closer-than-expected rise in interest rates, something that stock markets fear most of all.
In a speech to the Senate yesterday, Fed Chairman Powell reiterated his commitment to keeping interest rates low for a while and currently eliminating fears of inflation risks. The country is very low at the moment. Therefore, it seems that this is currently a trigger for realizing gains in stock markets (which have risen almost continuously since November 2020) based on fears of rising interest rates, a fear that is probably excessive and eventually when it disappears is expected to return stock markets back.