Pace of government debt issuance remains steady, tax revenues remain strong in June

ISRAEL - In Brief 30 Jun 2024 by Jonathan Katz

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Geopolitics: Israel continues to operate in Gaza targeting specific areas. The missile barrage from Lebanon has decreased somewhat compared to the previous week. There is a vague renewed initiative for a cease-fire with Hamas, according to the US. Although the Supreme Court ruled that the ultra-orthodox must be mobilized in the army, the ultra-orthodox parties in the coalition are not keen on leaving the government. Revenues improve and private consumption expands In February-April revenues from the various sectors expanded by 2% saar, following contraction of 2.7%in the previous three months. Revenues from retail/wholesale trade expanded by 4.1% in February-April following contraction of 1.5%. Domestic credit card purchases increased by 0.6% m/m in May (real). The MoF is reporting robust tax revenues in June, above their forecast. We expect a rate hold decision next week on elevated geopolitical risks. Manufacturing picks up in April Manufacturing increased by 2.3% m/m in April but is still down 5.7% y/y. In recent months, manufacturing in the hi-tech sector has contracted while other sectors have witnessed expansion. We note that recent PMI data (May) point to expansion on strong domestic orders. The hi-tech sector raised 2.9bn USD abroad in Q2, up from 1.9bn in Q124. The bond market: Domestic Bond issuance in July is planned for 17.5bn ILS with five weeks of issuance. The average weekly issuance with remain stable at around 3.5bn. Bond redemption will reach 5.4bn in July. The average issuance duration in July is expected to reach 5.5 years, down from 6.6 years in April. Foreigners reduced their holdings in the domestic tradeable bond market to 8.9% in April from 9.0...