Middle East Markets Surge on Hopes of Gaza Ceasefire Deal
A potential ceasefire agreement to end the 15-month conflict in Gaza has sent regional government bond markets and Israel’s currency soaring, as investors breathe a sigh of relief. Negotiations are underway in Qatar, with US President Joe Biden hinting that a deal is within reach.
Regional Bonds on the Rise
As optimism builds, bonds from Israel, Lebanon, Egypt, and Jordan are all edging higher. The Israeli shekel and Egyptian pound have also seen fractional gains in currency markets. This upswing marks a significant shift in sentiment towards the region, which has faced a tumultuous couple of years.
A Historic Few Months in the Middle East
Recent events have been nothing short of remarkable. The killing of Hamas leader Yahya Sinwar by Israel, the weakening of Iran-backed Hezbollah, and the election of a new president in Lebanon have all contributed to the region’s newfound optimism. Perhaps most surprising of all, Syria’s veteran leader Bashar Al-Assad has been toppled, paving the way for potential reforms.
Investor Sentiment on the Rise
Marten Bressel, a portfolio manager and rates trader at FIM partners, attributes the surge in sentiment to the combination of these events. “The ceasefire deal is a key part of this shift, and hopes are high that the new Syrian government will open up the country to the West,” he notes.
Lebanon Leads the Charge
Lebanon has been the biggest beneficiary of investor optimism, with its bonds almost tripling in value over the last few months. The country’s dire financial woes may finally be addressed, now that nearly two years of political paralysis appear to be coming to an end.
Israel’s Markets Still Bear Scars of Conflict
Despite the recent upswing, Israel’s markets still bear the scars of the last 15 months of conflict. The heavy cost of the fighting has led to multiple downgrades of the country’s sovereign credit rating, a first for Israel.
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