April 2026 Market Insights: Ceasefire Relief, Compressing Risk Premia, and a Recovering Israeli Market
Market Updates
Israeli markets traded constructively during April as geopolitical risk premia continued to compress following the ceasefire agreements on the Iran and Lebanon fronts. While these arrangements remain provisional and subject to ongoing diplomatic negotiations, investor sentiment improved meaningfully throughout the month, broadening risk appetite across both equities and fixed income.
Market Performance in April
In Israel, major stock indices surged to new highs:
Israeli Equities:
TA-35: +6.7%
TA-90: +9.5%
TA-125: +2.4%
Israeli fixed income markets also benefited from the continued decline in risk premia:
Israeli Bonds:
Tel-Bond 60: +1.3%
Tel-Bond Shekel: +1.1%
The yield on the 10-year Israeli government bond declined to approximately 4.00% from 4.12% at the end of March, reflecting improved sentiment and lower sovereign risk premium.
Macro Picture
Israel's March CPI increased by 0.4% month-over-month, while annual inflation moderated to 1.9% — remaining comfortably within the Bank of Israel's 1%–3% target range. Despite ongoing ceasefire negotiations on the Iran and Lebanon fronts, the broader economic effects of the conflict — including supply-chain disruptions and labor shortages — continue to place upward pressure on prices in the near term.
The Bank of Israel maintained its policy rate at 4.0%, continuing to signal a cautious approach toward future easing. Although inflation has moderated, policymakers remain focused on balancing improving financial conditions with ongoing geopolitical and fiscal uncertainty.
In foreign exchange, the shekel appreciated sharply against the U.S. dollar, supported by reduced geopolitical risk, ongoing institutional FX flows, and continued capital inflows into Israel. Although renewed reports surrounding potential regional escalation temporarily increased volatility late in the month, structural demand for the shekel remained supportive.
Israel's macroeconomic backdrop remains relatively stable relative to many developed markets. The combination of moderating inflation, declining local yields, and relatively lower sensitivity to global energy prices continues to support the attractiveness of Israeli fixed income markets.
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