The markets will react to the legislation developments this week

ISRAEL - In Brief 24 Jul 2023 by Jonathan Katz

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The markets will react the legislation developments this week 24.7.23 The financial markets are optimistic regarding a compromise Last week witnessed an upward correction in local markets, including the bond market and FX. This could reflect an expectation for a positive compromise on the judicial legislation regarding the cancellation of the “reasonableness clause”. Tremendous uncertainty remains as massive protests continue and many pilots and other reserves announced that they will stop volunteering. Credit rating agencies demand explanations from Israeli government due to ongoing unilateral legislation. The agencies consider issuing 'special announcements' regarding Israel, after reassurances from the Netanyahu government which served as the basis for their decision to not lower Israel’s credit rating failed to materialize. We expect a volatile week both in FX and FI as the judicial legislation proceeds parallel to attempts to reach a compromise on a softer version. Signs of some weakness in the labor market June witnessed a decline of both the number of employed and the number of work seekers, as the unemployment rate remained stable at 3.6%. Job vacancies declined as well, mostly in the high tech services. The ratio of job vacancies to the number of unemployed has declined to 0.70, similar to pre-Covid (0.67). The labor remains fairly tight, but showing some recent signs of softness, supportive of less wage pressure and rate stability. Economic indicators point to steady growth Total revenues (real) from the economy increased by 1.8% saar in March-May, accelerating from 1.1% in the previous three months (trend data). Revenues from retail declined modestly. Manufa...