Dr. Gil Michael Befman, chief economist at Bank Leumi, and interest rate strategist Dudi Reznik write in their weekly review that the September index, which fell 0.1% and was slightly lower than previously forecast, substantiates the assessment that the inflation environment in Israel continues to be negative.
In the coming months, and especially into 2021, the inflation environment is expected to rise moderately, but it does not appear that it will even reach the lower limit of the price stability target. Against the background of the low inflation environment and in addition to the slowdown in the economy due to the limitations and closure of the past month, it is not inconceivable that the Bank of Israel will announce the use of other monetary tools this week. An additional up to 10 bp to zero level.
The possibility of expanding the Bank of Israel’s activity is also supported by the continuation of the strengthening trend of the shekel and the fact that the shekel returned to trading at its peak levels against the currency basket. They also note that when comparing the prices of transactions in apartments made in July 2020-August 2020, compared to the prices of transactions made in June-July 2020, it was found that apartment prices decreased by 0.3% and compared to the same period in 2109, apartment prices increased by 2.3%. In the prices of new apartments there is a rise in prices.
Looking ahead, the October index is expected to be in the range of minus 0.1% – plus 0.1%. The rate of decline in the index in 2020 is expected to amount to minus 0.8% to minus 0.4%. In the next twelve months, the rate of increase in the index is expected to be 0.6-1.0%.
Befman and Reznik also point out that the US inflation environment is stabilizing, adding that the annual rate of inflation has been extremely low since 2012. With unemployment still close to 8%, and the labor market slowing, the services component of the index appears to be relatively weak in the coming months.
And more in the world – “China’s foreign trade data reinforces the assessment that the recovery from the plague in China is one of the fastest in the world. The rise in China’s imports indicates that real domestic investment remains strong. Exports also remained strong, apparently thanks to the recent rise in retail sales among China’s major trading partners. Chinese imports were stronger than expected in September, rising from an annual change of minus 2.1% in August to an increase of 13.2% in September (in dollar terms).
In terms of real volume, import growth appears to have been even stronger. Imports of agricultural and industrial goods are strengthening, with the latter pointing to continued power in infrastructure and construction investment. ”The two add that“ alongside the rapid economic recovery in China, China’s stock market indices are rising rapidly; To illustrate, the CSI 300 index has risen by about 20% so far this year and 40% compared to the bottom in March. These are much larger increases than in most other markets during this period. “
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It is clarified and emphasized that what is stated in this review does not constitute a substitute for advice that takes into account the data and the special needs of each person. The publication of the information in this review does not constitute a recommendation or opinion in connection with the execution of any transaction or investment in securities, including the purchase and / or sale of securities. It should be emphasized that for any information of any kind that appears in the review – each person must perform additional testing and verification, taking into account his data and special needs. It should be noted that the information may contain errors and that market changes and / or other changes may apply to it, and that significant deviations may also be discovered between the forecasts and analyzes that appear in the actual situation. Therefore, making any decision based on a fact, opinion, opinion, forecast or analysis that appears in the review – is the sole responsibility of the reader.
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