Hopes for a ceasefire agreement in Gaza are lifting government bond markets in the region

Written by Mark Jones

LONDON (Reuters) – Hopes for a ceasefire agreement to end the war in Gaza raised government bond markets in the region and the Israeli shekel on Tuesday, with investors feeling relieved after 15 months of conflict.

Negotiators were meeting in Qatar in hopes of finalizing a ceasefire agreement and the release of the hostages after US President Joe Biden indicated that this agreement was within reach.

More than six hours after the start of the talks, there was still no news of an outcome, but Israel’s ties and those of Lebanon, Egypt and Jordan were all improving with growing optimism.

The price of the Israeli shekel and the Egyptian pound also rose slightly in the currency markets.

Reaching a ceasefire agreement will mark the end of a historic few months in the Middle East.

They included Israel’s killing of Hamas leader Yahya Sinwar, weakening Iran-backed Hezbollah enough to allow Lebanon to elect a new president, and perhaps most surprising of all, the ouster of veteran Syrian President Bashar al-Assad.

Martin Bressel, portfolio manager and interest rates trader at FIM Partners, said the set of events helped lift sentiment towards the region after a difficult two years.

He added, “The ceasefire agreement is part of that, and hopes are very high at the present time that the new Syrian government will open the country further to the West.”

However, Lebanon was the biggest trade for investors.

Its bonds have nearly tripled over the past few months amid hopes that it can begin to address its dire financial problems now that nearly two years of near-total political paralysis have ended.

Israeli markets bear the scars of the last 15 months of the conflict in Gaza. The high cost of the fighting has led to the country’s sovereign credit rating being downgraded several times although it had not been downgraded before last year.

(Reporting by Mark Jones, Editing by Gareth Jones)