FINANCING ISRAEL'S TRADE and NATIONAL DEFICITS
A useful indicator for measuring foreign sentiment?
Foreign participation in Israel's domestic bond markets

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Foreign participation in Israel's domestic bond markets (Vertical Bar Chart)
Note 1: Although exceedingly small the information that one might obtain from this activity may be substantial. The year 2001 marks the year in which New York's Twin Towers fell and the Pentagon in Washington, D.C. was badly damaged by a small group of al Qaeda conspirators. Moreover, the excessively high ratio of non-linked to linked bond holdings suggests a very active source of market trading (see graph below).
Source: Government of Israel. Ministry of Finance. Government Debt Management Unit. Annual Report 2002. [online document] EARTH's copy is available on request.
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Non-linked to linked bond holdings
in Israel's domestic bond markets

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Non-linked to linked trading activity in Israel's domestic bond market (Horizontal Line Graph)
Note 1: Linked bonds differ from non-linked bonds insofar as the coupon rates of linked bonds vary with changes in the macroeconomy. Thus, the need to trade them in order to maintain a constant yield (rate of return) is far less than that for bonds whose coupon rates are fixed -- i,e, non-linked.
Note 2: The excessively high ratio of non-linked to linked bonds for foreign investors in Israel's domestic tradable-bond market suggests highly speculative trading activity and thus a barometer for foreign sentiment about Israel's domestic economy.
Source: Government of Israel. Ministry of Finance. Government Debt Management Unit. Annual Report 2002. [online document] EARTH's copy is available on request.
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