Poria Financial Releases Weekly Review: Bond Yields and Dollar Dominate

Or Poria, chairman of Poria Financial Investments, released a weekly economic review addressing the opening of the trading week, the bond market, and the foreign exchange market.

"The trading week opened this morning as bond yields continue to stand at the center of investors' attention," Poria noted. Following the decrease in volatility for chip stocks and a certain—perhaps temporary—calm in the geopolitical arena, bond yields, which sit at peak levels of more than two decades, are once again largely dictating the tone in the markets.

While a certain decline in yields was recorded on Friday following the release of weaker-than-expected employment data, their high level continues to be a central factor in asset pricing and investor expectations regarding the interest rate environment.

"The trend in the bond market directly projects onto the foreign exchange market, with the US dollar continuing to strengthen against major currencies," according to the review. In less than a quarter, the American currency has completed an increase of about 6% against the euro. Against the shekel, the picture is particularly prominent: the dollar is trading above the psychological level of 3 NIS, while the euro is trading deep below the 3.5 NIS level.

At the same time, looking to the medium and long term, basic economic parameters continue to support the strengthening of the shekel against leading currencies. Therefore, even if in the short term the high yield environment provides a tailwind to the dollar, the fundamental forces of the local economy may later return to influence the direction of the shekel.